How to Qualify for the Child/Dependent Care Credit

It's summertime—a long way from tax time. But what you do now can help you lower the tax amount you pay later.

You may be able to claim a credit if you pay someone to care for a dependent under age 13, or for your spouse or dependent who is unable to  care for himself or herself. The credit can be up to 35 percent of your expenses.

To qualify, you must pay these expenses so that you can work or look for work.

Here are some things the Internal Revenue Service wants you to know:  

• You must have paid the child and dependent care expenses so that you (and your spouse, if filing jointly) could work or look for work. If you do not find a job and have no earned income for the year, you are not eligible for the credit.
• You must make payments for child and dependent care to someone that you (and your spouse) cannot claim as a dependent. If you make payments to your child, he or she cannot be your dependent and must be 19 or older by the end of the year.
• If you pay someone to come to your home and care for your dependent or spouse, you could be considered a household employer, which means you would have to pay employment taxes. Usually, you are not considered a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business.
• The cost of day camp may qualify as an expense for the credit. But expenses for overnight camps do not qualify.
• If you pay a sitter at your home or a day care facility outside the home to provide child care, you may get some tax benefit if you qualify for the credit. You will need the name of the child care provider, the address, the identification number—Social Security number or employer identification number—and the total amount paid.
• If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Your employer will be able to tell you whether your benefit plan qualifies. There are limits to the amount that can be excluded from your income. 

For more information, check out IRS Publication 503, "Child and Dependent Care Expenses." This publication is available on the IRS website, irs.gov, or by calling 800-TAX-FORM (800-829-3676).