If you paid someone to care for a child under age 13 or a qualifying spouse or dependent so you could work or look for work, you may be able to reduce your tax by claiming the Child and Dependent Care Credit on your federal income tax return. To qualify, your spouse, children over the age of 13, and other dependents must be physically or mentally incapable of self-care.
The credit is a percentage of the amount of work-related child and dependent care expenses you paid to a care provider. The credit can be up to 35 percent of your qualifying expenses, depending upon your income.
For 2006, you may use up to $3,000 of the expenses paid in a year for one qualifying individual, or $6,000 for two or more qualifying individuals. These dollar limits must be reduced by the amount of any dependent care benefits provided by your employer that you exclude from your income.
To claim the credit for child and dependent care expenses, you must meet the following conditions:
- Income You must have earned income from wages, salaries, tips or other taxable employee compensation, or net earnings from self-employment
- Payee The payments for care cannot be paid to someone you can claim as your dependent on your return or to your child who is under age 19, even if they are not your dependents
- Filing Status Your filing status must be single, married filing jointly, head of household, or qualifying widow(er) with a dependent child
- Care The care must have been provided for one or more qualifying persons
- Home The qualifying person must have lived with you for more than half of 2006
There are some limitations on the amount of credit you can claim. If you received dependent care benefits from your employer, other rules apply.
For more information on the Child and Dependent Care Credit, see Publication 503, Child and Dependent Care Expenses. You may download these free publications on this web site or order them by calling 800-TAX-FORM (800-829-3676). Links:
- Publication 503, Child and Dependent Care Expenses (PDF 167K)
- Form W-10, Dependent Care Provider’s Identification and Certification (PDF 31K)
- Form 2441, Child and Dependent Care Expenses (PDF)
- Form 2441 Instructions (PDF 32K)
- Publication 17, Your Federal Income Tax (PDF 2,075K)
- Tax Topic 602