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For many working families, the cost of childcare is a huge financial burden.  According to Child Care Aware of America, the average cost of center-based daycare is $11,653 for infants, $9,809 for toddlers and $9,043 for four-year-olds.  If you’re paying someone to care for your child or dependent with disabilities, you may be eligible for the Child and Dependent Care Credit when you file your tax return.  The credit can help you get back some of the money spent on childcare and reduce your tax bill by thousands of dollars.

What is the Child and Dependent Care Credit?

The Child and Dependent Care Credit is a tax credit you may be able to claim if you paid someone to care for your dependent while you worked or looked for a job.  This year the credit is more valuable than it was in 2020 and it’s fully refundable.  Thanks to the American Rescue Plan Act, the credit is now worth 50% of your childcare costs.  Qualifying expenses include daycare, preschool, before and after school care, dependent care center, and day camp.  For 2021, parents can claim up to $8,000 in expenses for one child and $16,000 for two or more children.  So, if you paid at least $16,000 in childcare for two or more kids last year, you may walk away with an $8,000 payday. 

Who qualifies as a dependent?

You must have a qualifying dependent to claim the credit.  The IRS defines this as:

  • A child under the age 13 who is your dependent
  • A spouse who is mentally or physically unable to care for themselves and lived with you at least six months
  • An individual who is physically or mentally unable to care for themselves, lived with you more than six months and was either your dependent or would’ve been your dependent if their income didn’t exceed $4,300; or they filed a joint tax return; or you can be claimed as a dependent on someone else’s return.

How to claim the credit

The only way to claim the Child and Dependent Care Credit is to file a tax return.  So, do your taxes now at ezTaxReturn.com.  We’ve helped millions and millions of taxpayers file fast, easy and stress-free.  Plus, you’ll get all the latest tax credits and deductions you legally deserve.