If you paid to have someone take care of your child (such as daycare) or another adult in your household while you were working, then you may qualify for the Child and Dependent Care Tax Credit. This is a non-refundable tax credit that can reduce how much you owe to the IRS dollar for dollar.

Note that in 2021, the rules to this tax credit were altered because of the American Rescue Plan signed into law on March 11, 2021. As of 2022, you can claim up to:

  • $3,000 of qualifying expenses for one child or dependent 
  • $6,000 of qualifying expenses for two or more children or dependents 

The credit amount is calculated using a sliding percentage from 35% to 20% based on your AGI (adjusted gross income). For instance, a filer with an AGI of $0 - $15,000 may take a credit equal to 35% of their employment-related expenses. This percentage decreases in multiple steps down to 20% for filers with AGIs of $43,001 or greater.

Who is a Qualifying Individual?

You can claim this tax credit as long as the person receiving the care was:

  • A child aged 12 or younger
  • A spouse who was physically or mentally incapable of self-care and lived with you for more than half of the year
  • An individual who was physically or mentally incapable of self-care and lived with you for more than half of the year

If the individual can be described as any of the following, then you will not be able to claim this tax credit:

  • A capable spouse
  • The parent of your child who is living with you (such as an ex-spouse) 
  • You own children or other dependents already listed on your tax return