Can I Claim Both the Child Tax Credit and Dependent Care Credit?

Tax credits reduce your overall tax liability by providing direct savings. The Child Tax Credit (CTC) and the Child and Dependent Care Credit (CDCC) are two significant benefits for families, and eligible taxpayers can generally claim both simultaneously if they meet each credit’s specific requirements. This guide clarifies each credit’s parameters and explains how they can be applied together to maximize tax advantages.

Understanding the Child Tax Credit

The Child Tax Credit (CTC) is a benefit aimed at providing financial relief to families with qualifying children. For the 2025 tax year, the maximum credit amount is $2,200 per qualifying child. This credit helps reduce a taxpayer’s federal income tax liability dollar-for-dollar.

To be considered a qualifying child for the CTC, the child must be under age 17 at the end of the tax year. The child must also be a son, daughter, stepchild, foster child, sibling, half-sibling, or a descendant (e.g., grandchild, niece, nephew). Furthermore, the child must have lived with the taxpayer for more than half of the year, not have provided more than half of their own support, and be properly claimed as a dependent on the taxpayer’s return. Beginning in 2025, both the child and at least one taxpayer (or spouse if filing jointly) must possess a valid Social Security Number to qualify for the credit.

The full credit is available to taxpayers with a modified Adjusted Gross Income (AGI) up to $200,000 for single filers, heads of household, or qualifying widow(er)s, and $400,000 for those married filing jointly. If income exceeds these thresholds, the credit amount is reduced by $50 for every $1,000 (or fraction thereof) over the limit. A portion of the Child Tax Credit, the Additional Child Tax Credit (ACTC), is refundable, meaning taxpayers may receive it as a refund even if they owe no tax. For 2025, the maximum refundable amount through the ACTC is $1,700 per qualifying child.

Understanding the Child and Dependent Care Credit

The Child and Dependent Care Credit (CDCC) helps working taxpayers offset expenses paid for the care of a qualifying individual. This credit is specifically for care expenses that enable the taxpayer, and their spouse if filing jointly, to work or actively look for work. The credit amount is calculated as a percentage of qualifying expenses, with the percentage varying based on the taxpayer’s Adjusted Gross Income (AGI).

A qualifying individual for the CDCC can be a dependent child under the age of 13 when the care was provided. It can also include a spouse or other dependent of any age who is physically or mentally incapable of self-care and lives with the taxpayer for more than half of the year. The care expenses must be primarily for the individual’s well-being and protection.

Qualifying expenses include costs for services like daycare, after-school programs, and babysitters. However, expenses for overnight camps, educational costs, or care provided by certain relatives (such as the taxpayer’s spouse, the child’s parent, or the taxpayer’s own child under age 19) generally do not qualify. The maximum amount of expenses that can be used to calculate the credit is $3,000 for one qualifying individual and $6,000 for two or more qualifying individuals. The credit percentage ranges from 20% to 35% of these expenses, decreasing as AGI increases.

Claiming Both Credits Together

Claiming the Child Tax Credit (CTC) does not prevent a taxpayer from also claiming the Child and Dependent Care Credit (CDCC). These two credits serve different purposes and have distinct eligibility criteria, allowing them to be claimed on the same tax return if all individual requirements are met. The CTC is based on simply having a qualifying child, while the CDCC is based on incurring specific expenses for the care of a qualifying individual to enable work.

A crucial distinction is that the same dollar amount of an expense cannot be used to qualify for both credits. For example, while the existence of a child contributes to eligibility for the CTC, the expenses paid for that child’s care are what contribute to the CDCC. Taxpayers must ensure that any expenses claimed for the CDCC are legitimate care expenses and not merely general costs associated with raising a child.

Adjusted Gross Income (AGI) can impact the maximum amount or phase-out of both credits, but their calculations are generally independent. Both credits have income thresholds where the benefit begins to reduce or phase out. For the CTC, the credit amount starts to decrease for married couples filing jointly with a modified AGI above $400,000 and for all other filers above $200,000. Similarly, the percentage used to calculate the CDCC decreases as AGI rises, with different income brackets corresponding to varying credit percentages.

Despite these separate AGI phase-outs, meeting the income requirements for one credit does not disqualify a taxpayer from the other. For instance, a family with income high enough to partially phase out their CTC might still qualify for a portion of the CDCC, depending on their care expenses and specific AGI. Claiming both credits simultaneously offers a comprehensive approach to tax savings for families managing general child-rearing costs and work-related care expenses.

Reporting Credits on Your Tax Return

To claim these valuable tax credits, specific forms must be completed and submitted with your federal income tax return. The Child Tax Credit (CTC) is primarily reported on Form 1040, U.S. Individual Income Tax Return. Taxpayers must also attach Schedule 8812, “Credits for Qualifying Children and Other Dependents,” to calculate their CTC, including any refundable Additional Child Tax Credit (ACTC).

For the Child and Dependent Care Credit (CDCC), taxpayers must complete Form 2441, “Child and Dependent Care Expenses.” This form details the qualifying care expenses paid and helps determine the credit amount based on income and eligibility. Once Form 2441 is completed, the calculated credit amount then flows to the Form 1040. If dependent care benefits were received from an employer, these amounts must also be reported on Form 2441, as they can reduce eligible expenses.