Form 2441 FAQs: The Child and Dependent Care Credit

Do you pay someone to care for your child or another dependent while you work or look for work? If so, you could qualify for the Child and Dependent Care Credit (CDCC), a tax break that can help you offset the cost of daycare, preschool, and more.

At a glance:

• The CDCC helps cover childcare expenses while you work or look for work.
• It’s worth 20-35% of eligible expenses, up to $3,000 for one dependent ($6,000 for two or more).
• Eligible expenses can include daycare, preschool, and day camp costs.

What is the Child and Dependent Care Credit?

The Child and Dependent Care Credit is a federal tax credit designed to help families with the cost of care for their dependents, whether that be children in daycare, a caretaker for a disabled parent, or another eligible dependent.

Currently, the credit is worth anywhere from 20-35% of qualified care expenses — up to $3,000 for one qualifying dependent and up to $6,000 for two or more qualifying dependents.

For example, if you claimed the maximum amount of $3,000 in expenses for one dependent in 2023 and qualified to deduct 35% of care expenses, your credit amount would be $1,050 (or 35% of $3,000). The max credit for two or more dependents would be $2,100.

Who is eligible for the Child and Dependent Care Credit?

To claim the CDCC, you must have earned income during the tax year and must have paid for the care expenses so you could either work or look for work.

In other words, costs paid to a babysitter to watch your child while you go out for the evening aren’t an eligible expense. But if you pay daycare fees for someone to watch your toddler while you’re at work, that would be a qualified expense.

The amount you can claim depends on your adjusted gross income (AGI). You can claim the maximum credit percentage of 35% if your AGI is less than $15,000. If your AGI is $43,000 or above, you can claim 20%. The IRS lists the complete child and dependent care income limits on page 13 in Publication 503.

What dependents qualify for this tax credit?

In most cases, the care expenses should be for someone you’re claiming as a dependent on your income tax return. Qualifying individuals must also fit into one of the following categories:

• A child under 13 who lived with you for more than half the year
• A disabled spouse who has lived with you for half the year and is mentally or physically unable to care for themselves
• Another person (like a parent) who has lived with you for half the year and is mentally or physically unable to care for themselves. This person must be your dependent OR would have been your dependent except for one of the following reasons:
  • They earned more than $4,700 of gross income during the year.
  • They filed a joint return.
  • You or your spouse could be claimed as a dependent on someone else’s tax return.

The IRS covers some nuances for children of divorced parents in more detail in Publication 503 as well.

What is Form 2441?

To claim the Child and Dependent Care tax credit, you’ll need to file IRS Form 2441 and Schedule C.

On Form 2441, you’ll list the names and info of any care providers (including address and Social Security number for tax purposes), the qualifying person(s) receiving care, and the care expenses you paid during the tax year. The form has a worksheet to help you determine your credit amount based on your provided information. Once you get that number, you’ll list your credit amount on Schedule 3, line 2.

If you use TaxAct^® as your tax preparation service, we can assist you in making these calculations and filling out all the necessary tax forms on your behalf.

For more details, you can also check out the Form 2441 instructions provided by the IRS.

What are qualifying child and dependent care expenses for Form 2441?

Some common qualifying care expenses for this tax credit include:

• Costs of childcare provided by daycare centers or babysitters
• Fees for preschool (and comparable programs) for children not yet in kindergarten
• Day camp costs (overnight camps don’t qualify)
• Payments made to a cook or house cleaner who also provided care for your dependent
• Before- and after-school care for children under 13 years old

The following costs do NOT count as qualified care expenses for the CDCC:

• Costs for children to attend kindergarten and above
• Summer school programs
• Tutoring fees
• Overnight camp costs
• Child support payments

Is the Child and Dependent Care Credit refundable?

The Child and Dependent Care Credit is nonrefundable. This means if the tax credit amount exceeds your tax liability, you won’t be able to claim the excess back as a tax refund.

Can I claim both the Child Tax Credit and the Child and Dependent Care Credit?

Yes, you can claim the Child Tax Credit (CTC) and Child and Dependent Care Credit on the same tax return. Though they share similar names, these are two separate tax credits with different rules and eligibility requirements for tax filers.

This article is for informational purposes only and not legal or financial advice.

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