Child and Dependent Care Credit FAQs

A1. You are eligible to claim this credit if you (or your spouse in the case of a joint return) pay someone to care for one or more qualifying persons in order for you to work or look for work, and your income level is within the income limits set for the credit.  If you are married, you must file a joint return to claim the credit.  However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still claim the credit.  If you or your spouse was a full-time student, see Q17 and IRS Publication 503, Child and Dependent Care Expenses, for more information on eligibility.

Earned Income Requirement:  You (and your spouse in the case of a joint return) must have earned income during the year to claim the credit. See Q16 and Q17 for more information, including special rules that may apply if you are a student or are unable to care for yourself.

A2. To claim the credit, you will need to complete Form 2441, Child and Dependent Care Expenses, and include the form when you file your Federal income tax return.  In completing the form to claim the credit, you will need to provide a valid taxpayer identification number (TIN) for each qualifying person. Generally, this is the social security number for the qualifying person. 

You should keep records of your work-related expenses.  Also, if your dependent or spouse is not able to take care of himself or herself, your records should show both the nature and length of the disability.  Other records you should keep to support your claim for the credit are in IRS Publication 503, Child and Dependent Care Expenses and Q3.

For more information about completing the form and claiming the credit, see the Instructions for Form 2441. 

A3. You must identify all persons or organizations that provided care for your child, dependent, or spouse.  To identify the care provider, you must give the provider’s name, address, and taxpayer identification number (TIN).  You can use Form W-10, Dependent Care Provider’s Identification and Certification, to request this information.  If the care provider information you give is incorrect or incomplete, your credit may not be allowed.  However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit.  For guidance on showing due diligence, see IRS Publication 503, Child and Dependent Care Expenses.

You should keep this information with your tax records.  For more information on the record keeping requirements, please see Publication 503, Child and Dependent Care Expenses.

A4. A qualifying person is:

• Your dependent who is under age 13 when the care is provided;
• Your spouse, if your spouse isn’t mentally or physically able to care for himself or herself and lives with you for more than half the year; and
• A person who isn’t mentally or physically able to care for himself or herself, lives with you for more than half the year, and either:
  • Is your dependent, OR
  • Would have been your dependent except that (i) he or she receives more than a certain gross income amount ($4,300 in 2021), (ii) he or she files a joint return, or (iii) you (or your spouse in the case of a joint return) can be claimed as a dependent on someone else’s return.

A5. Persons who can’t dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves.  Persons who must have constant attention to prevent them from injuring themselves or others also are considered not able to care for themselves.

A6. The percentage of your work-related expenses allowed as a credit depends on your income (and your spouse’s income in the case of a joint return).  The maximum percentage of your work-related expenses allowed as a credit for 2021 is 50 percent.  The 2021 Instructions for Form 2441 and IRS Publication 503, Child and Dependent Care Expenses for 2021 both will contain a chart indicating the percentage of work-related expenses allowed as a credit at each income level.  The IRS anticipates that the 2021 Instructions for Form 2441 and the 2021 Publication 503 will be available in January 2022.

A7. Yes. The amount of your adjusted gross income determines the percentage of your work-related expenses that you are allowed as a credit.  For this purpose, your income is your “adjusted gross income” shown on your Form 1040, 1040-SR, or 1040-NR.

For 2021, the 50-percent amount begins to phase out if your adjusted gross income is more than $125,000, and completely phases out if your adjusted gross income is more than $438,000.  For more information on the percentage applicable to your income level, please refer to the 2021 Instructions for Form 2441 or IRS Publication 503, Child and Dependent Care Expenses for 2021.  The IRS anticipates that the 2021 Instructions for Form 2441 and the 2021 Pub. 503 will be available in January 2022.

A8. Yes. The maximum amount of work-related expenses you can take into account for purposes of the credit is $8,000 if you have one qualifying person, and $16,000 if you have two or more qualifying persons.  This means that the maximum total amount of the credit is $4,000 (50 percent of $8,000) if you have one qualifying person, and $8,000 (50 percent of $16,000) if you have two or more qualifying persons.

Earned Income Limitation: The amount of work-related expenses that can be taken into account in calculating the credit cannot exceed your earned income.  If you are married and filing a joint return, the work-related expenses you can take into account are limited to the lesser of your or your spouse’s earned income.  See Q16 and Q17 for more information about exceptions to the earned income rule for married joint filers.

A9. Because you have two or more qualifying persons, you are subject to the higher $16,000 work-related expense limitation, regardless of how the expenses are allocated among the qualifying persons.

A10. Yes.  For 2021, the credit is refundable for eligible taxpayers.  This means that even if your credit exceeds the amount of Federal income tax that you owe, you can still claim the full amount of your credit, and the amount of the credit in excess of your tax liability can be refunded to you. 

A11. You must pay the work-related expenses incurred in 2021 by December 31, 2021, and meet the special residency requirements for the credit to be refundable for 2021. See Q12 for more information about the residency requirements.

A12. To be eligible for the refundable portion of the credit for 2021, you (or your spouse in the case of a joint return) must have your main home in one of the 50 states or the District of Columbia for more than half of the tax year.  Your main home can be any location where you regularly live.  Your main home may be your house, apartment, mobile home, shelter, temporary lodging, or other location and doesn’t need to be the same physical location throughout the taxable year.  If you are temporarily away from your main home because of illness, education, business, vacation, or military service, you are generally treated as living in your main home during that time.

Special Exception for Military Personnel: For U.S. military personnel stationed outside of the United States, see Q15.

A13. In many cases, the answer is yes.  However, the credit must be claimed from your local territory tax agency and not from the IRS. Furthermore, special rules apply to these five U.S. territories.  Please contact your local territory tax agency for information about availability and your eligibility for the credit in 2021.

A14. Generally, no.  While you can claim the credit to offset your tax liability, the credit is refundable only if you (or your spouse in the case of a joint return) have your main home in one of the 50 states or the District of Columbia for more than half of the tax year.  Your main home can be any location where you regularly live.  Your main home may be your house, apartment, mobile home, shelter, temporary lodging, or other location and doesn’t need to be the same physical location or in the same state throughout the taxable year.  If you are temporarily away from your main home because of illness, education, business, vacation, or military service, you are generally treated as living in your main home.

Special Exception for Military Personnel: For an exception to this answer regarding U.S. military personnel stationed outside of the United States, see Q15.

A15. Yes. U.S. military personnel who are stationed outside the United States on extended active duty are considered to have their main home in one of the 50 states or the District of Columbia for purposes of qualifying for the refundable portion of the credit.  For this purpose, “extended active duty” means any period of active duty pursuant to a call or order to active duty for a period in excess of 90 days or for an indefinite period.

A16. Maybe.  Your spouse who is out of work during the year must be actively looking for employment, and the work-related expenses must be incurred so that you and your spouse can work or look for work as discussed in Q18.  You (and your spouse in the case of a joint return) must have earned income to claim the credit.  Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment.  A net loss from self-employment reduces earned income. Earned income also includes any strike benefits and disability pay you report as wages.  Unemployment compensation is not included in earned income. 

The amount of work-related expenses that can be taken into account in calculating the credit cannot exceed your earned income. If you are married and filing a joint return, your work-related expenses on your joint return are limited to the lesser of your or your spouse’s earned income.  See Q17 for special rules that may apply if you are a student or unable to care for yourself.

A17. Maybe. There are special earned income rules for students and those mentally or physically incapable of caring for themselves.  If you (or your spouse in the case of a joint return) are a full-time student or are mentally or physically incapable of caring for yourself, you will be treated as having earned income of $250 if you have one qualifying person (or $500 for two or more qualifying persons) for any month you are a full-time student or not able to care for yourself. 

Important: If in the same month you and your spouse both did not work and were either full-time students or not physically or mentally capable of caring for yourselves, only one of you can be treated as having earned income in that month. 

A18. A work-related expense is an amount you (or your spouse in the case of a joint return) pay for the care of a qualifying person, or for household services if at least part of the services is for the care of a qualifying person, in order for you to work or look for work.  Your work can be for others or in your own business or partnership.  It can be full or part-time.  It also includes actively looking for work. However, if you do not find a job and have no earned income for the year, you cannot take this credit. See Q16 and Q17 for more information about the earned income requirement.

Services that may qualify as work-related expenses include nanny-share arrangements, day care, preschool, and day camp for your qualifying persons, and the care can be provided either at your home or outside your home. See IRS Publication 503, Child and Dependent Care Expenses for more information.

Q19. Yes, unless you can claim your mother as a dependent. 

You can also count some work-related payments you make to other relatives, even if they live in your house.  However, don’t count any amounts you pay to:

• A person you (or your spouse in the case of a joint return) can claim as a dependent;
• Your child who was under age 19 at the end of the year, even if the child isn’t your dependent;
• A person who was your spouse at any time during the year; or
• The parent of your qualifying person if your qualifying person also is your child and under age 13.

A20. Maybe.  To count as a work-related expense, the care must be for your dependent under the age of 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. Care that is provided outside the taxpayer’s home can be in a center, or in another person’s home.  If the care is provided by a dependent care center, the center must comply with all state and local regulations that apply to centers.  A dependent care center is a place that provides care for more than 6 persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. For an exception to this rule, see Q21. 

A21. No. The cost of overnight camp does not count as a work-related expense.

A22. No. Expenses to attend kindergarten or a higher-grade level are not expenses for care, and therefore are not work-related expenses. 

A23. Maybe. Expenses paid for before- or after-school care of a child in kindergarten or in a higher-grade level are expenses for care, and therefore are work-related expenses, provided all other conditions are satisfied (for example, the expenses allow you to work or to look for work).