Child and Dependent Care Tax Credit (CDCTC)

The Child and Dependent Care Tax Credit is a federal and state tax credit that allows working parents to deduct a percentage of their child care costs from the amount of federal taxes owed. The federal CDCTC is not refundable. The state CDCTC is 25 percent of the federal credit the parent receives. The child and dependent care tax credit is based on the parent’s out of pocket expense, including the co-payments made aby a parent participating in the state Child Care Assistance Program (CCAP) whether or not the family receives child care assistance.

Who Qualifies?

For tax year 2016:

  • Parent must have a dependent child under age 13 that lives with them at least part of the year, or a dependent of any age who cannot care for himself or herself.
  • Parent must have earned income that is more than the amount spent on child care.
  • Child care provided must enable parent to work or look for work.
  • Any kind of child or dependent care can qualify, including care at a center, a family day care home or a church, or care provided by a neighbor or a relative (except if provided by a spouse, a dependent, or a child of the tax filer under 19).

The size of the Child and Dependent Care Tax Credit depends on the number of children or dependents in care, a family’s income, and the amount the family paid for care during the year. It can be as much as $2,100 for families with income below $15,000 and $1,050 for families with income between $15,000 and $43,000. The state CDCTC can be as much as $525 for lower income families and $263 for families with higher income. Families cannot claim all of their child care expenses. Families can claim up to $3,000 in dependent care expenses for one child/dependent and up to $6,000 for two children/dependents.

A family can apply for the Child Tax Credit in addition to the EITC and the Child Tax Credit. The EITC and CDCTC do not affect a family’s eligibility for this credit.

How to Apply

To claim the credit, you can file Form 1040, Form 1040A or Form 1040NR (You cannot file the 1040EZ or 1040NR-EZ). You must complete Form 2441 and attach it to your tax form.

For free tax help contact a Volunteer Income Tax Assistance location near you. For free legal assistance on federal tax matters contact the RILS’s Low Income Taxpayers Clinic.