Hiring a professional to care for a disabled adult, or having to pay for childcare services for children under 13 can be costly.  Luckily, the government has a tax credit which can help reduce these costs and put more money back into your pocket. The Child and Dependent Care Credit can put up to 35% of the expense you incurred throughout the year back in your hands.

What Are the Eligibility Requirements?

To qualify for this tax credit, you must have a dependent child under the age of 13 for whom paid childcare services were rendered. You can also qualify if the dependent is over the age of 12, but has a physical or mental disabilities which hinders self-care abilities. In these cases, you will be required to prove that the dependent is incapable of self-care.  You’ll have to obtain proof that you were granted the opportunity to work for income, or seek employment, as a result of having child care. If benefits are offered through an employer, you have to deduct the benefit amount from the total claim for credit.

The dependent must have lived in your home for more than 6 months out of the year in order to qualify for the Child and Dependent Care Credit. Additionally, you must have supported the child or adult dependent by paying for over half of their expenses relating to providing shelter. In the case of divorce, sometimes the parent that doesn’t maintain custody full time can still claim the child as a dependent. In these situations, the parent who houses the child can still file with the Child Care Credit, even if the child isn’t claimed as a dependent.

The care provider must meet certain criteria in order for you to claim the credit. Often, you will be required to provide specific information about the caregiver, including but not limited to their name, address, company name (for those working within a business), and tax ID number (either a social security number or employee identification number) when filling out the Form 2441 for the IRS.