IRS Publication 503: Child and Dependent Care Expenses

The Child and Dependent Care Credit lets working taxpayers recover part of what they spent on childcare or care for a disabled spouse or dependent. It’s worth 20% to 35% of up to $3,000 in qualifying expenses for one person, or up to $6,000 for two or more, with the percentage tied to your adjusted gross income.¹ The credit is non-refundable, so it can wipe out your tax bill but won’t produce a refund on its own.

Who Can Claim It

You must have paid for care so you could work or actively look for work. On a joint return, both spouses need earned income during the year.²

There’s a workaround if one spouse is a full-time student or is physically or mentally unable to care for themselves. The IRS treats that spouse as having earned $250 a month with one qualifying person, or $500 a month with two or more.³ That imputed amount keeps the credit alive even when one spouse has no actual wages.

Married taxpayers generally have to file jointly. The exception is if you lived apart from your spouse for the last six months of the year, in which case you can file separately and still claim the credit.²

Who Counts as a Qualifying Person

Two categories of people qualify:

A dependent child under age 13 when the care is provided. If your child turns 13 midyear, only what you paid before that birthday counts.³
A spouse or dependent of any age who cannot care for themselves physically or mentally, and who lives with you for more than half the year.⁴

The second category is broader than most people assume. An aging parent with dementia who lives with you and whom you claim as a dependent can qualify.

Which Expenses Qualify

Qualifying costs are amounts you paid for the care and protection of the qualifying person while you worked. Daycare centers, preschool, in-home providers, and summer day camps all count. Household help such as a housekeeper counts too, if part of the job includes looking after the qualifying person.³

What doesn’t count: overnight camp, private school tuition from kindergarten up, tutoring, and any charges for food, clothing, or entertainment.⁴ Day camp yes, sleepaway camp no. Preschool yes because it’s primarily custodial; once your child hits kindergarten, tuition becomes education rather than care.

People You Can’t Pay

Some payments never qualify no matter what the care looks like. You can’t count amounts paid to your spouse, to the parent of your qualifying child (when that child is under 13), to your own child under age 19 at year-end, or to anyone you claim as a dependent.⁴ Paying your 17-year-old to babysit a younger sibling produces nothing.

How Much the Credit Is Worth

Three limits stack, and the smallest one governs at each step.

Start with your actual expenses, capped at $3,000 for one qualifying person or $6,000 for two or more.¹ That figure can’t exceed your earned income, or, on a joint return, the earned income of the lower-earning spouse. For a spouse treated as having imputed earnings, the $250 or $500 monthly amounts set the floor.³

Then multiply the expense base by a percentage tied to your AGI. The rate starts at 35% for AGI of $15,000 or less, drops one percentage point for every $2,000 above that threshold, and levels off at 20% for AGI above $43,000.³

Two examples. A family with two kids in daycare, $8,000 in total care costs, and an AGI of $50,000 caps expenses at $6,000 and multiplies by 20%, producing a $1,200 credit. A single parent with one child, an AGI of $20,000, and $4,000 in care caps at $3,000, multiplies by 32%, and gets $960.

The largest credit the formula allows is $2,100 (35% of $6,000 with two or more qualifying persons). Most families with AGI above $43,000 top out at $1,200. And because the credit is non-refundable, it only offsets tax you actually owe. If other credits have already brought your liability to zero, this one adds nothing.

How a Dependent Care FSA Changes the Math

Tax-free benefits from an employer dependent care flexible spending account or similar assistance program directly reduce the expense limit for the credit.¹ If you have two qualifying kids and exclude $5,000 through an FSA, the $6,000 cap drops to $1,000, and whatever percentage you’re at applies to that leftover slice.

Starting in 2026, the One Big Beautiful Bill Act raised the dependent care FSA contribution limit to $7,500 per year, or $3,750 if married filing separately. Under the earlier $5,000 limit, a family with two qualifying children could still route $1,000 of expenses to the credit. At $7,500, the entire $6,000 cap is wiped out by the FSA exclusion. If you max the FSA in 2026, there’s no room left for this credit.

That doesn’t automatically make the FSA the better choice. FSA contributions dodge both income tax and payroll tax, which usually favors moderate and higher earners. But a lower-income family qualifying for the 35% rate, with enough tax liability to use the credit, should run both scenarios before locking in FSA contributions at open enrollment. You report employer-provided benefits on Part III of Form 2441 before computing any remaining credit on Part II.⁵

Divorced and Separated Parents

When parents live apart, only the custodial parent can claim this credit for a child under 13, even if the noncustodial parent claims the child as a dependent using Form 8332.⁶ The credit follows physical custody for the greater part of the year, not the dependency exemption.

Noncustodial parents get tripped up on this often. You may be entitled to the Child Tax Credit through Form 8332, but that release doesn’t carry over. Daycare you pay for during your custody time doesn’t qualify unless the child actually lived with you for more than half the year.

Filing With Form 2441

Claim the credit by completing Form 2441 and attaching it to your Form 1040.⁷ Part I lists each provider with their taxpayer identification number: a Social Security number for an individual, an EIN for an organization. Part II runs the credit calculation. If you got any employer-provided dependent care benefits, do Part III first, because those benefits reduce your available expense limit going into Part II.⁵

Keep canceled checks, bank statements, and receipts showing the provider’s name and the dates and amounts of care. You don’t send these in, but you’ll need them if the return is reviewed.

When a Provider Won’t Give You Their ID

Use IRS Form W-10 to formally request the provider’s name, address, and taxpayer ID.⁸ If the provider refuses, the credit isn’t automatically lost, but you have to show the IRS you tried in good faith. Acceptable proof includes a completed Form W-10, a copy of the provider’s Social Security card, or a printed invoice or letterhead showing the provider’s name, address, and ID number.⁹

If none of that is possible, put the provider’s name and address on Form 2441, write “See Attached Statement” in the ID number field, and attach a short explanation of the steps you took. Without at least that documentation, the IRS can disallow the credit outright.

1
Office of the Law Revision Counsel. 26 U.S. Code 21 – Expenses for Household and Dependent Care Services Necessary for Gainful Employment
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Internal Revenue Service. IRS Publication 503 – Child and Dependent Care Expenses
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Internal Revenue Service. Publication 503 – Child and Dependent Care Expenses
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Internal Revenue Service. Child and Dependent Care Credit Information
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Internal Revenue Service. Instructions for Form 2441 – Child and Dependent Care Expenses
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Internal Revenue Service. Topic No. 602, Child and Dependent Care Credit
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Internal Revenue Service. Form 2441 – Child and Dependent Care Expenses
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Internal Revenue Service. About Form W-10, Dependent Care Provider’s Identification and Certification
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Internal Revenue Service. Form W-10, Dependent Care Provider’s Identification and Certification