Child Care Tax Credit (CCTC)
The child care tax credit is a federal tax credit that allows working parents to deduct a percentage of their child care costs from the amount of federal taxes owed. The CCTC is not refundable and cannot be received in the monthly paycheck. The child care tax credit is based on the parent’s out of pocket expense, whether or not the family receives child care assistance.
For tax year 2012:
- Parent must have a dependent child age 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 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 $1,050 for families with one child or dependent in care and up to $2,100 for families with more than one child or dependent in care. Families can claim only a limited amount of their child care expenses. Families with one child or dependent can claim up to $3,000 in these expenses and families with more than one child or dependent can claim up to $6,000. Eligible families will receive a credit worth between 20 percent and 35 percent of these expenses, depending on their income.
A family can apply for the Child Care Tax Credit in addition to the EITC and the Child Tax Credit. The EITC and Child Tax Credit 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. (Not 1040EZ or 1040NR-EZ) Download a copy of Form 1040, (PDF, 157KB). You must complete Form 2441 and attach it to your Form 1040, Form 1040A, or Form 1040NR. Download a copy of Form 2441 (PDF, 87KB).
For free tax help contact a Volunteer Income Tax Assistance location near you (PDF, 50KB). For free legal assistance on federal tax matters contact the RILS's Low Income Taxpayers Clinic.