Taxes 2022: Are You Eligible to Claim the Child and Dependent Care Tax Credit?

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If you paid a day care center, homecare aide, or other person or organization to care for your child — or a relative — so that you and/or your spouse could work or look for work, you may be eligible to claim the child and dependent care credit on your 2021 tax returns.

Learn: What Is the Earned Income Tax Credit and Why Does It Matter for Your Taxes? Explore: Teens & Taxes: Should Your Teen Deposit Their Tax Refund Into a Roth IRA?

The tax deadline to file 2021 returns falls on April 18, 2022. But the Internal Revenue Service is urging individuals to file as early as possible in order to receive their refunds faster. The IRS provides an easy worksheet to determine if you qualify for the child and dependent care credit. You can fill out the worksheet using the IRS Interactive Tax Assistant. The IRS says it takes about 10 minutes to complete the worksheet. But it may help to understand the guidelines for qualification and the specifics about the tax credit before you fill out the worksheet.

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It’s important to note that the child and dependent care credit is different from the child tax credit (CTC), and that no funds were issued in advance for the child and dependent care credit. You will also need proof of the payments to the care provider in order to claim the care credit.

How Much Is the Child and Dependent Care Credit Worth?

The child and dependent care credit is a fully refundable tax credit, which means even if you don’t owe the IRS any money, you can still receive the credit as a tax refund. You can claim up to $8,000 in expenses for the care of one dependent, and up to $16,000 for the care of two or more qualifying dependents.  

The credit is reimbursement for the costs incurred to “assure the individual’s well-being and protection.” This can include homecare aides, babysitters, daycare centers, adult daycare centers, summer camps, and other organizations and individuals devoted to the caretaking of children or adults.

Who Qualifies for the Child and Dependent Care Credit?

Qualifying dependents include children under the age of 13 when care was provided — or a spouse who was physically or mentally incapable of self-care and lived with you more than half the year.  The child and dependent care credit also applies to any individual (related or not) who lived with you for more than half the year and who you claimed as a dependent.

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If the person could have been your dependent except that they earned a gross income of $4,300 or more, or they filed a joint return, you can still claim the care credit. Finally, you can still claim the care credit if the individual in your care met any of the above qualifying criteria, but you could not claim them as a dependent because you could have been claimed as a dependent on someone else’s tax return for 2021.

What’s Needed to Claim the Credit

To claim the credit, you’ll need the Social Security number (SSN) or individual tax identification number (ITIN) of the child or dependent. You’ll also need to report the name, address, and tax ID number (either the SSN or employer identification number) of the individual or organization providing the care.

If you pay a provider directly to care for a dependent in your home, you may have to follow different guidelines as a household employer and withhold taxes for social security, Medicare, and federal unemployment tax.

It’s worth noting that you cannot claim the credit if the caregiver you pay is your spouse, the parent of a qualifying individual (for a child under 13), your child under the age of 19, or a dependent that you and/or your spouse claim on their tax return.

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How Do You Claim the Child and Dependent Care Credit?

If you qualify for the credit, you must complete IRS Form 2441, Child and Dependent Care Expenses, and attach it to the appropriate Form 1040 that you are required to file.

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About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of GeekTravelGuide.net, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.

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