Who Can You Claim As A Caregiver For The Dependent Care Credit?

Young girl playing on a play mat at daycare while wearing a mask due to COVID-19.
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If you pay someone to watch your children while you work — even if it’s your mother — you might be able to claim the child and dependent care credit on your taxes. If the expenses of childcare were incurred as a result of your or your spouse working or actively looking for work, you will be able to claim the credit. Keep in mind that you are not allowed to take this credit if you are married filing separately.

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What Counts as a Caregiver?

In order to receive this particular type of credit, you will need to prove that the expenses you incurred for child care were so that you could work. In other words, a caregiver you paid to go out to eat with your spouse does not qualify, but if you paid that same caregiver to watch your child so that you and your spouse could both work, then it could qualify.

Each person’s situation is different, and the only way to determine what can be counted towards the credit is to use the IRS worksheet here.

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Payments to Relatives

You are allowed to count work-related payments you make to relatives who are not your dependents, even if they live in your home. You cannot, however, count any payments to a person for whom you can claim a dependent, your child who was under age 19 at the end of the year, a person who was your spouse during the year or the parent of your qualifying individual if the dependent is under the age of 13.

Caregiver Identification

While many different types of people can count as caregivers, ranging from your mother to a daycare center, the most important thing to remember is that you must identify all persons or organizations that provide for your child or dependent. In order to do this, you will need to use Form 2441 Part I to show the information.

Depending on what kind of organization or person is looking after your dependents the type of information needed will change. Generally, you will need their name, address and taxpayer identification number. If the care provider is an individual, then their social security number can be accepted. If the organization is tax-exempt, like a church for example, then you enter “tax-exempt” in the space where it’s asked.

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If the provider refuses to give you identifying information, you should still report on the form whatever information you do have on them. Since the allowable types of providers are vast, it is important to be specific as to the nature of their help and the hours they provide care.

Taking a look at Publication 503, Child and Dependent Care Expenses, you can see what qualifies as an exception for certain taxpayers living apart from their spouses and meeting all the requirements of claiming the credit.

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About the Author

Georgina Tzanetos is a former financial advisor who studied post-industrial capitalist structures at New York University. She has eight years of experience with concentrations in asset management, portfolio management, private client banking, and investment research. Georgina has written for Investopedia and WallStreetMojo. 
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