How to Claim the Child and Dependent Care Credit

The Child and Dependent Care Credit is a nonrefundable tax credit for taxpayers who pay for the care of a qualifying individual, allowing them to work or look for work. The credit helps offset a portion of employment-related care expenses for a child or a dependent who is unable to care for themselves.

Qualifying for the Credit

Taxpayer Requirements

To claim the credit, you must meet the work-related expense test by having paid care expenses that enabled you and your spouse (if filing jointly) to work or look for employment. You must have earned income during the year. If you are married, both you and your spouse must have earned income, unless one spouse was a full-time student or physically or mentally incapable of self-care.

Married couples must file a joint tax return to be eligible, with limited exceptions for those who are legally separated or living apart. If not filing jointly, your status must be single, head of household, or qualifying surviving spouse. You cannot claim the credit if you make payments to certain individuals, such as your spouse, the parent of your qualifying child if the child is under 13, or another person you claim as a dependent.

Qualifying Person Requirements

The person receiving care must meet specific criteria. A qualifying person is most often a dependent child who was under the age of 13 when the care was provided. The child must be your son, daughter, stepchild, foster child, sibling, or a descendant of one of these, and have lived with you for more than half the year.

The credit also applies to a spouse or any other dependent who was physically or mentally incapable of self-care and lived with you for more than half the year. This means they were unable to care for their own basic needs. In cases of divorced or separated parents, the custodial parent is the one who can claim the credit, even if the noncustodial parent is entitled to claim the child as a dependent.

Identifying Qualifying Care Expenses

Qualifying expenses are those paid for the purpose of ensuring the well-being and protection of a qualifying person while you work or seek employment. These costs must be for care, not for services like education. For example, the cost of a daycare center, a nanny, a babysitter, after-school programs, or day camps are eligible.

Certain expenses are explicitly excluded. The cost of private school tuition for kindergarten and higher grades does not qualify, as it is primarily educational. Expenses for overnight camps, summer school, or tutoring programs are also not considered qualifying care expenses. Services not directly related to care, such as housekeeping, are ineligible unless they are a minor part of the overall care.

For the 2025 tax year, the total work-related expenses you can use to calculate the credit are capped. The limit is $3,000 for the care of one qualifying person and $6,000 for two or more qualifying persons. These are the maximum expense amounts you can consider, not the amount of the credit itself. If you received dependent care benefits from your employer, you must subtract that amount from your qualifying expenses.

Calculating the Credit Amount

The amount of qualifying expenses you can use cannot exceed your earned income for the year. For married couples filing jointly, the expenses are limited to the lesser of your earned income or your spouse’s earned income. This is the first limitation in the calculation.

The credit percentage is based on your Adjusted Gross Income (AGI). For the 2025 tax year, the percentage starts at 35% for an AGI of $15,000 or less. The rate decreases by one point for every $2,000 increase in AGI, reaching 20% for taxpayers with an AGI over $43,000.

Employer-provided dependent care benefits, reported in Box 10 of your Form W-2, reduce the amount of qualifying expenses you can claim. For instance, if you have $6,000 in care expenses for two children but received $5,000 in dependent care benefits, you can only use the remaining $1,000 of expenses to calculate the credit.

Consider a married couple with two children, an AGI of $90,000, and $7,000 in daycare costs. Their expense limit is $6,000. Because their AGI is over $43,000, their credit percentage is 20%, making their credit $1,200 (20% of $6,000). If they received $2,500 in employer benefits, their eligible expenses would drop to $3,500 ($6,000 limit – $2,500 benefits), and their credit would be $700 (20% of $3,500).

Information Needed to Claim the Credit

You will need the name and Social Security Number (SSN) for each qualifying person you are claiming. You must also collect detailed information about each care provider you paid, including their name, full address, and Taxpayer Identification Number (TIN). A provider’s TIN is either an SSN for an individual or an Employer Identification Number (EIN) for a business.

This collected data is used to complete Form 2441, Child and Dependent Care Expenses. Part I of the form requires the provider’s information, while Part II is where you list the details for each qualifying person. If a care provider refuses to give you their TIN, you can still claim the credit by demonstrating you exercised due diligence in trying to obtain it, which involves documenting your attempts.

How to Claim the Credit

To claim the credit, attach the completed Form 2441, Child and Dependent Care Expenses, to your federal income tax return. You must file Form 1040 or a variation like Form 1040-SR or 1040-NR to claim this credit.

After calculating the final credit amount on Form 2441, you transfer that figure to Schedule 3 (Form 1040), Additional Credits and Payments. The total credits from Schedule 3 are then carried over to your main Form 1040, where they reduce your tax liability.