Child And Dependent Care Credit


DEFINITION of 'Child And Dependent Care Credit'

A non-refundable tax credit for unreimbursed childcare expenses paid by working taxpayers. The Child and Dependent Care Credit is designed to encourage taxpayers to pay childcare expenses so that they can remain gainfully employed.

The Child and Dependent Care Credit is claimed on Form 2441 for taxpayers that are filing Form 1040, or Schedule 2 for Form 1040A.

BREAKING DOWN 'Child And Dependent Care Credit'

The taxpayer, the care provider, the dependent/dependents must all meet certain requirements in order for the taxpayer to qualify for the credit. The Child and Dependent Care Credit is limited to a range of 20% to 35% of $3,000 for one qualifying child or dependent under age 13 or $6,000 for two or more qualifying persons, depending on the taxpayer's Adjusted Gross Income.

For more information, see IRS instructions for Form 2441.

  1. Dependent Care Flexible Spending ...

    A flexible spending account (FSA) designed to provide tax-exempt ...
  2. Special Needs Child

    Children who have been determined to require special attention ...
  3. Adjusted Gross Income - AGI

    A measure of income used to determine how much of your income ...
  4. Dependent

    An individual whom a taxpayer can claim for credits and/or exemptions. ...
  5. Tax Credit

    An amount of money that a taxpayer is able to subtract from the ...
  6. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
Related Articles
  1. Retirement

    Raising Grandchildren A Financial Feat

    Becoming a full-time caregiver again presents many challenges - including making ends meet.
  2. Personal Finance

    Benefits Of A Dependent Care Flexible Spending Account

    These accounts can lower your taxable income and help you support a dependent family member.
  3. Personal Finance

    Special Trusts For Special Needs

    If you or someone you love has a disability, these trusts can help ease the cost of care.
  4. Taxes

    Taxing Times For Divorced Parents

    Find out how to deal with the tax issues that arise for divorced parents with dependent children.
  5. Home & Auto

    Insuring Against The Loss Of A Homemaker

    Read on to uncover the hidden economic value of a stay-at-home parent.
  6. Taxes

    How To Claim A Dependent On Your Tax Return

    If you are a caregiver, get to know the rules for claiming a dependent before filing your taxes.
  7. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  8. Budgeting

    Kids Or Cash: The Modern Marriage Dilemma

    It now costs nearly $300,000 to raise a child for 18 years. Are you sure you're up for it?
  9. Options & Futures

    Budgeting For A New Baby

    This little member of your family will be a big expense. Find out what you need to budget for and how to save.
  10. Savings

    5 Ways To Save On Child Care Costs

    Child care costs can be a shock to new and expecting parents, but are some programs in place to help with the first few years.
  1. Why is the Cayman Islands considered a tax haven?

    The Cayman Islands is one of the most well-known tax havens in the world. Unlike most countries, the Cayman Islands does ... Read Full Answer >>
  2. Why is Luxembourg considered a tax haven?

    Luxembourg has been the tax haven of choice for many corporations and mega-rich individuals around the world since the 197 ... Read Full Answer >>
  3. Why is Panama considered a tax haven?

    The Republic of Panama is considered one of the most well-established pure tax havens in the Caribbean due to extensive legislation ... Read Full Answer >>
  4. Why is Andorra considered a tax haven?

    Andorra is one of many locations around the globe considered a tax haven because of its relatively lenient tax laws. However, ... Read Full Answer >>
  5. Do financial advisors prepare tax returns for clients?

    Financial advisors engage in a wide variety of financial areas, including tax return preparation and tax planning for their ... Read Full Answer >>
  6. Can my IRA be garnished for child support?

    Though some states protect IRA savings from garnishment of any kind, most states lift this exemption in cases where the account ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  2. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  3. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  4. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  5. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  6. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!