Child and Dependent Care Tax Credit.
In plain English
The Child and Dependent Care Tax Credit is a federal tax credit that returns a percentage of what you spend on care for a child under 13, or a dependent who cannot care for themselves, when that care lets you work or look for work. It applies to a capped amount of qualifying expenses, and the percentage phases down as income rises. Because it is a credit, it cuts your tax bill dollar for dollar, unlike a deduction that only reduces taxable income. It is separate from, and can be coordinated with, a dependent care FSA.
01Why it matters
Childcare is one of the largest costs for working parents, and this credit directly reduces the tax you owe on part of it, so claiming it correctly is real money.
02The math, step by step
You pay 6,000 dollars for daycare so you can work. The credit lets you count part of that, and at a 20 percent rate on 3,000 dollars of eligible expenses you cut your tax bill by 600 dollars.
03What this is NOT
The Child and Dependent Care Credit is NOT the Child Tax Credit. This one offsets the cost of care that lets you work; the Child Tax Credit is a broader per-child credit that does not depend on care expenses.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.