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What is Dependent Care Credit?

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  • Written By: Stephanie B. Mojica
  • Edited By: A. Joseph
  • Last Modified Date: 26 January 2020
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Dependent care credit usually allows a person to pay fewer taxes than other citizens who do not have to cover the cost of childcare or elder care. To actually use dependent care credit as a tax deduction, a family must meet several guidelines outlined by the government agency that handles taxation. These guidelines typically cover things such as the age of the dependent or dependents, the type and amount of dependent care costs, the residence of the dependent or dependents and the type of tax return filed.

Usually, the child for whom a dependent care credit is claimed must be younger than 12 years old. Disabled adults, such as a spouse, older child or parent, might also qualify for a dependent care credit. The person's need for care could determine whether he or she qualifies.

Payments to a spouse, child or any other member of an immediate family typically cannot be used to claim a dependent care credit. Also, the dependent care services must have been purchased to allow the person filing the tax return or his or her spouse to work outside of the home or look for work. The cost of dependent care for other purposes usually cannot be claimed. Any dependent care services provided for no charge, such as free daycare provided by an employer, also cannot be claimed.

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Generally, the person for whom a dependent care credit is claimed must live with the claiming person for at least six months out of the year. In cases of joint custody, the person asking for the credit must be able to document the amount of time the dependent or dependents spent living with him or her. It might be possible for both parents to receive dependent care credit.

To request a dependent care credit, one typically must file a tax return as a single person, a head of household, a qualified widow or a qualified widower, or a married couple could file a joint return. Any available dependent care credit might not cover the entire amount of any expenses. In countries such as the United States, for example, citizens can deduct only 35 percent of their dependent care expenses from their tax liabilities, and maximum amounts are established for these benefits. As of 2010, the maximum benefit in the U.S. was $3,000 US Dollars for one qualifying person and $6,000 USD for two qualified dependents.

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