<topic sku="core" tNum="289587" author="sallyh" xmlns="x-schema:hhTopicSchema.xml"><index><title>Learn about the child and dependent care credit</title><category>tax</category><klink type="prcdr">Tell me about the child and dependent care credit</klink></index>
<content>
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<p>If you pay someone to take care of your children or other dependents so you can work, you may be able to take the child and dependent care credit. Child and dependent care is considered an expense of earning taxable income. Rather than reducing your taxable income by these expenses, however, the IRS allows you to directly reduce your taxes with a credit of 20 to 30 percent of your qualified expenses. </p>
<p>You may qualify for the child and dependent care credit if you meet all six of the following requirements:</p>
<ul>
<li>You (and your spouse, if you are married) were either working or looking for work while the care was being provided. If you were looking for work, you must have had earned income for the year. If one spouse worked and the other spouse was in school or disabled, you still may be able to take the credit. </li>
<li>You do not use the Married Filing Separately filing status, unless you are legally separated or all the following conditions are true: </li>
<ul>
<li>Your home is the qualifying child's home for more than half the year. </li>
<li>You pay more than half the cost of maintaining your home for the year. </li>
<li>Your spouse did not live in the home for the last six months of the year. </li>
</ul>
<li>You (and your spouse, if you are married) pay more than half the cost of maintaining your home. </li>
<li>You and the child or other dependent live in the same home. </li>
<li>The caregiver is not your spouse, dependent, or child under age 19 at the end of 2001. </li>
<li>You report the required information, including taxpayer identification numbers, for the caregiver and the person receiving care. </li>
</ul>
<p>You can take a credit based on expenses you pay for the care of any child you claim as a dependent who is under age 14 when the care is given. You can also claim expenses for the care of your disabled spouse who cannot care for himself or herself, or for the care of any disabled person who meets the requirements to be claimed as your dependent.</p>
<p>Your credit is based on your qualified expenses, including daycare and household help, even if the household help also does other duties, such as cleaning and cooking. Qualified expenses do not include child support payments or amounts you pay for help such as gardeners and chauffeurs.</p>
<p>The child and dependent care credit is calculated on Form 2441, Child and Dependent Care Expenses. This is a nonrefundable credit, which means that your allowable credit cannot be higher than your income tax liability. You cannot carry forward excess dependent care credits to future years.</p>
<p> For more information, see IRS Publication 17, Your Federal Income Tax, on the <alink type="xtnl" href="http://www.irs.gov">IRS Web site</alink>.</p>
