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6 min read

Childcare Tax Credits

The Child and Dependent Care Credit can save you $600–$2,100 per year on daycare costs. Here's how to claim every dollar.

How the CDCTC Works

The Child and Dependent Care Tax Credit (CDCTC) reimburses a percentage of childcare expenses for kids under 13 while you work or look for work. It's a non-refundable credit that directly reduces your tax bill.

$3,000

Max Expenses (1 child)

Eligible for credit

$6,000

Max Expenses (2+)

Eligible for credit

20-35%

Credit Rate

Based on income

Credit = Eligible Expenses × Credit Rate (20-35%)

Rate decreases as income increases above $15,000

What Qualifies as Childcare?

1

Daycare Centers

Licensed daycare and preschool programs qualify fully.

2

In-Home Care

Nannies, au pairs, babysitters — must report their SSN/EIN.

3

Before/After School

Programs that provide care while you work count.

4

Summer Day Camp

Day camps qualify but overnight camps do NOT.

What Doesn't Count

Overnight camps, kindergarten/school tuition, food and clothing costs, and care by your spouse or the child's other parent are not eligible.

CDCTC vs. Dependent Care FSA

Which Saves More?

Feature	CDCTC	DC-FSA
Max Benefit	$600-$1,050	$2,500 tax savings
Tax Treatment	Credit (after-tax)	Pre-tax deduction
Income Limit	No limit	No limit
Use-It-Or-Lose-It	No	Yes
Best For	Lower incomes	Higher incomes (>$43K)

You Can Use Both

You can use a DC-FSA ($5,000) AND claim CDCTC on expenses above that amount, up to the $3K/$6K limit minus FSA contributions.

Key Takeaways

Credit covers 20-35% of up to $3,000 (1 child) or $6,000 (2+ children)
Both parents must work or be in school to qualify
Provider must give you their SSN or EIN — get Form W-10
Dependent Care FSA usually saves more for families earning above $43K
Keep all receipts and provider tax IDs for your records

Back to Toddler topics

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6 min read

Childcare Tax Credits

The Child and Dependent Care Credit can save you $600–$2,100 per year on daycare costs. Here's how to claim every dollar.

How the CDCTC Works

The Child and Dependent Care Tax Credit (CDCTC) reimburses a percentage of childcare expenses for kids under 13 while you work or look for work. It's a non-refundable credit that directly reduces your tax bill.

$3,000

Max Expenses (1 child)

Eligible for credit

$6,000

Max Expenses (2+)

Eligible for credit

20-35%

Credit Rate

Based on income

Credit = Eligible Expenses × Credit Rate (20-35%)

Rate decreases as income increases above $15,000

What Qualifies as Childcare?

1

Daycare Centers

Licensed daycare and preschool programs qualify fully.

2

In-Home Care

Nannies, au pairs, babysitters — must report their SSN/EIN.

3

Before/After School

Programs that provide care while you work count.

4

Summer Day Camp

Day camps qualify but overnight camps do NOT.

What Doesn't Count

Overnight camps, kindergarten/school tuition, food and clothing costs, and care by your spouse or the child's other parent are not eligible.

CDCTC vs. Dependent Care FSA

Which Saves More?

Feature	CDCTC	DC-FSA
Max Benefit	$600-$1,050	$2,500 tax savings
Tax Treatment	Credit (after-tax)	Pre-tax deduction
Income Limit	No limit	No limit
Use-It-Or-Lose-It	No	Yes
Best For	Lower incomes	Higher incomes (>$43K)

You Can Use Both

You can use a DC-FSA ($5,000) AND claim CDCTC on expenses above that amount, up to the $3K/$6K limit minus FSA contributions.

Key Takeaways

Credit covers 20-35% of up to $3,000 (1 child) or $6,000 (2+ children)
Both parents must work or be in school to qualify
Provider must give you their SSN or EIN — get Form W-10
Dependent Care FSA usually saves more for families earning above $43K
Keep all receipts and provider tax IDs for your records

Back to Toddler topics