Child and Dependent Care Credit: What counts as qualified expenses?

MWhich parent responsible for the cost of childcare benefits from Child and Dependent Care Credit. Although the credit is directed toward working parents or guardians, it may also apply to taxpayers who have been full-time students or are unemployed for part of the year.

You may qualify for a tax credit on 2021 taxes If you pay for a daycare center, babysitting, summer camp, or other caregiver to care for an eligible child under 13 or a disabled dependent of any age.

For one child or dependent, up to 35 percent of rehabilitation expenses $3,000 ($1050)or up to $6000 ($2100) For two or more children or dependents.

Expenses eligible for the Child and Dependent Care Credit

Although you may realize that daycare fees qualify for the Child and Dependent Care Credit, the IRS takes into account much more than just the cost of daycare when calculating the credit. Eligible expenses include:

  • A babysitter or licensed dependent care home that provides childcare.
  • The cost of hiring a cook, housekeeper, maid, or cleaner to take care of a child or dependent.
  • Even for camps centered around a sport or activity, fees for day camp or summer camp are eligible if the camp is selected to provide care while the parent or children are on the job. Night camps, on the other hand, are ineligible.
  • Pre- and after-school care costs for children under the age of thirteen.
  • Expenses of a nurse, home health aide, or other caregiver for a dependent disabled person.

Remember that tuition, tutoring, or overnight camp expenses do not count as qualifying expenses.

private conditions

Because every family is unique, the IRS has a number of exceptions to the eligibility rules. Because of these exceptions, more families can benefit from the credit.

  • Even if the other parent has the right to claim the child as a dependent due to a divorce or separation agreement, the custodial parent (the parent with whom the child spends most nights out of the year) can claim the credit.
  • Even if you can’t claim a disabled adult as a dependent because she has too much gross income or because you or your spouse can claim to be a dependent by someone else, you can get credit for her care.
  • The IRS waives the income requirement for your spouse if he or she is an adult with a disability.
  • The IRS considers that your spouse earned income for each month she was a full-time student who attended college for at least five months outside the tax year.