What is Child Care Credit?

Question:  What is Child Care Tax Credit/Dependent Care Credit?

Answer:   A Child Care redit for the costs of care for a qualifying individual to allow you to work or look for work. The dollar limit on the amount of the expenses you can use to figure the credit is $3,000 for the care of one qualifying individual or $6,000 for two or more qualifying individuals. The amount of your credit is between 20 and 35 percent of your allowable expenses. The percentage you use depends on the amount of your adjusted gross income.  The maximum Child Care Tax Credit is $600 per child.  Some people assume it is $3,000.

You must have earned income (W-2, 1099 MISC or Self-Employed) to qualify for the Child Care Tax Credit.

You need to file tax form 2441 if you want to receive the Child Care Tax Credit.

Please note: Child Care Tax Credit is different from Child Tax Credit.