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You may be able to claim the child and dependent care credit if you pay for the care of a qualifying individual so you can work or look for work. If you are married, both spouses must have earned income to qualify for the credit. Exceptions apply to disabled or student spouses.

To enter child and dependent care information in your TaxAct return, click the Federal tab (On smaller devices, click the menu icon in the upper left-hand corner, then select Federal), then click Child and Dependent Care.

The amount of your credit is generally a percentage (20-35%, depending on adjusted gross income) of the work-related care expenses you paid to a care provider. The expenses that qualify for the credit must be reduced by the amount of any dependent care benefits provided by your employer that you excluded from gross income.

Your qualifying expenses are capped at $3,000 ($6,000 if you had two or more qualifying individuals) and are reported on Form 2441. The credit is nonrefundable, so it can only reduce your tax liability to zero.

A qualifying individual for the purposes of the child and dependent care credit is:

  • Your dependent who was under age 13 when the care was provided and was your qualifying child
  • Your spouse who was physically or mentally incapable of self-care and who lived with you you for more than half of the year, or
  • A person who was physically or mentally incapable of self-care, lived with you for more than half of the year, and was your dependent (for an exception to the dependent requirement, see IRS Publication 503, page 3). 

The maximum allowable credit is $1,050 for one dependent or $2,100 for two or more dependents (35% of $3,000/$6,000 in expenses). The allowable credit will decrease if you have fewer qualifying expenses or if you have an AGI over $15,000. 

For more information, see the IRS Instructions for Form 2441IRS Publication 503, and the related links below. 

Related Links

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