When Do The Irs Determine Child Care Costs?

The Child and Dependent Care Credit is a federal tax benefit that allows taxpayers to claim a credit for expenses paid for the care of children under age 13 or for a disabled spouse or dependent who isn’t able to care for themselves. The credit can be up to 35 of your employment-related expenses, and to qualify, you must pay these expenses so you (or your spouse if filing jointly) can work or look for work.

For tax year 2021, the amount of qualifying expenses increased from $3,000 to $8,000 for one qualifying person and from $6,000 to $8,000 for two or more people. To claim this credit, you must complete and submit Form 2441, the Child and Dependent Care Expenses, with your Form 1040 individual income tax return. The top credit percentage of qualifying expenses increased from 35 to 50 for tax year 2021 only.

The credit is calculated based on your income and a percentage of expenses that you incur for the care of qualifying persons to enable you to go to work, look for work, or care for a dependent under the age of 13 or any other qualifying person who regularly spends at least 8 hours. For tax year 2023, the maximum amount of care expenses you’re allowed to claim is $3,000 for one person, or $6,000 for two or more people.

For tax year 2021, the maximum eligible expense for this credit is $8,000 for one child and $16,000 for two or more. These expenses must be incurred for children under the age of 13 or for a dependent who is physically or mentally incapable of self-care.

To claim the Child and Dependent Care Credit, complete Form 2441: Child and Dependent Care Expenses and attach it to your Form 1040. The total combined childcare expenses will be used to determine the child and dependent care credit amount, and each provider’s information must be included in the calculation.