What this line means
The credit for expenses you paid to a care provider so you (and your spouse, if filing jointly) could work or look for work. This covers daycare, preschool, after-school programs, day camps, and care for a disabled spouse or dependent. The credit is a percentage of up to $3,000 in expenses for one qualifying person or $6,000 for two or more. You calculate it on Form 2441.
Does this apply to you?
- You paid for daycare, a nanny, an au pair, or after-school care for a child under age 13
- You paid for day camp (not overnight camp) so you could work
- You paid for care for a disabled spouse or dependent of any age who lives with you
- Both you and your spouse worked, looked for work, or were full-time students during the year
Easy to overlook
The credit percentage depends on your income The credit ranges from 20% to 35% of qualifying expenses, based on your adjusted gross income. 1 Filers with AGI above $43,000 get the minimum 20%. A filer with AGI of $25,000 paying $6,000 for two children in daycare gets a 29% credit — $1,740. Many filers assume the credit is a flat percentage and underestimate it at lower income levels. IRS Form 2441 Instructions — Child and Dependent Care Expenses
You must have the care provider’s tax ID number Form 2441 requires the name, address, and taxpayer identification number (SSN or EIN) of every care provider. 2 If you pay a neighbor, babysitter, or individual caregiver, you need their Social Security number. If they refuse to provide it, you must show you made a reasonable effort to obtain it. Without the provider’s tax ID, the IRS disallows the credit entirely. General filing pattern — missing provider tax ID disallows credit
Watch out for this
Claiming expenses that exceed the earned income limit. Your qualifying expenses cannot exceed the lower earner’s income. If one spouse earned $2,000 and the other earned $60,000, the maximum qualifying expenses are $2,000, not $6,000. Full-time students and disabled spouses are treated as earning $250 per month for one qualifying person or $500 per month for two or more.
Footnotes
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IRS Form 2441 Instructions, Credit Percentage. https://www.irs.gov/instructions/i2441 ↩
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IRS Form 2441 Instructions, Part I - Persons or Organizations Who Provided the Care. https://www.irs.gov/instructions/i2441 ↩