What Is Form 2441 for Child and Dependent Care Expenses?

Taxpayers use Internal Revenue Service (IRS) Form 2441, Child and Dependent Care Expenses, to claim a non-refundable tax credit designed to offset care costs. This credit helps pay for the supervision of a child or another dependent, enabling the taxpayer to maintain employment or actively look for a new job. The form is used to calculate the credit amount based on your expenses and income, which ultimately reduces your total tax liability.

Eligibility for the Child and Dependent Care Credit

To qualify for the credit, you must satisfy three tests. The first is the qualifying person test, which includes your dependent child under age 13 when care was provided. It also includes a spouse or other dependent who was physically or mentally incapable of self-care and lived with you for more than half the year. If your child turned 13 during the tax year, you can claim expenses for the portion of the year before their birthday.

Next, the earned income test requires that you, and your spouse if filing jointly, have income from a job or self-employment. An exception exists for a non-earning spouse who was a full-time student for at least five months of the year. A similar exception applies if your spouse was physically or mentally unable to care for themselves.

Finally, the work-related expense test requires that you paid for care so you (and your spouse) could work or actively look for work. Expenses for care while you are not employed, such as for a weekend getaway, do not qualify. The costs must be for services like a daycare center, babysitter, or summer day camp. Overnight camps, however, are not eligible expenses.

Required Information for Form 2441

To complete Form 2441, you need your care provider’s full name, address, and Taxpayer Identification Number (TIN). For an individual, this is their Social Security Number (SSN), while a business will have an Employer Identification Number (EIN). If a provider refuses to give you their TIN, you must show that you exercised due diligence in trying to obtain it.

You will also need the name and Social Security Number for each qualifying person. Additionally, you must have the total dollar amount paid to each care provider and your earned income amount (and your spouse’s, if filing jointly). If you received dependent care benefits from your employer, this amount is reported in Box 10 of your Form W-2 and must be included.

Calculating Your Credit on the Form

The calculation begins with your total work-related expenses, which are subject to dollar limits. You can count a maximum of $3,000 in expenses for one qualifying person or up to $6,000 for two or more. The credit is a percentage of these expenses based on your Adjusted Gross Income (AGI). The credit percentage ranges from 20% to 35%, with taxpayers having an AGI of $15,000 or less using the 35% rate. The rate decreases as income rises, down to a flat 20% for those with an AGI over $43,000.

Part III of the form is for taxpayers who received dependent care benefits from an employer, such as through a flexible spending account (FSA). These benefits are reported on your W-2 and are usually tax-free. You must use Part III to determine if any portion of the benefits is taxable and to reduce your eligible work-related expenses. For example, if you had $6,000 in expenses but received $5,000 in employer benefits, only the remaining $1,000 is used for calculating the credit.

Filing Form 2441

Form 2441 cannot be submitted on its own; it must be attached to your annual tax return, such as Form 1040, 1040-SR, or 1040-NR. Most tax preparation software will automatically generate and attach the form if you have dependent care expenses. The final credit amount is transferred to Schedule 3 (Form 1040), “Additional Credits and Payments,” to ensure it is properly applied against your total tax.