Contributed by PhillipB, TaxPro Agent, FreeTaxUSA
As with other child-related tax benefits, the child and dependent care credit aims to ease the financial cost of raising children or caring for disabled dependents. However, determining which parent can claim the child and dependent care credit can be challenging.
Requirements to claim the child and dependent care credit
1. Qualifying Individual
- Your qualifying individual must be either:
- A child under the age of 13 when the care was provided and whom you claim as a dependent, or
- A spouse who is physically and or mentally incapable of self-care who has lived with you for more than half of the year, or
- An individual who was physically or mentally incapable of self-care who has lived with you for more than half of the year and either:
- Was your dependent, or
- Could have been your dependent except that their income was too high, they filed a joint return, or they could have been claimed as a dependent on someone else’s return.
- Children of divorced, separate or unmarried parents
- A child under the age of 13 or wasn’t physically or mentally able of self-care
- Received more than one-half of support from one or both parents that are divorced, legally separated or
- Child was in the custody of one or both parents for more than one-half of the year
- You were the child’s custodial parent (greater number of nights in your home, unless equal, than parent with higher AGI).
2. Care Location
- The care that is provided can be given inside or outside the home.
- If the care is given inside the home, the expenses claimed for the credit can only include expenses for the care of the qualifying individual.
3. Report Care Provider Information
- You need to report the name, address, and taxpayer identification number of the care provider.
- You can request the information using Form W-10, Dependent Care Providers Identification and Certification.
4. Excluded Care Providers
- The care provider cannot be a relative that is:
- A parent of the qualifying individual (if the qualifying individual is under the age of 13).
- Your child (under the age of 19).
- A dependent whom you or your spouse may claim on your return.
Unmarried Parents
- For unmarried parents, the child and dependent care credit can only be claimed by the parent with custody for more than half of the year (i.e., the home where the child slept more than 183 nights).
- If the noncustodial parent claims the child tax credit because the custodial parent released the child tax credit using Form 8332, they can only claim the child tax credit. The custodial parent can still claim head of household filing status, child and dependent care credit, and the earned income tax credit.
Married Filing Separately
Generally, taxpayers who are filing with the married filing separate filing status cannot claim the child and dependent care credit. However, the following circumstances allow for married taxpayers to file using other filing statuses:
- If you are legally separated from your spouse under a divorce or separate maintenance decree, you would be eligible to file using the single or head of household filing status
- If you are still legally married and all the following applies, you are considered unmarried and can file using the head of household filing status:
- You lived away from your spouse for more than the last half of the tax year.
- A qualified dependent lived with you for that time.
- You paid for more than half of the upkeep on the home where you lived with your dependent.
