Tax Credits:

Child and Dependent Care Expenses

You may be able to claim credit for expenses paid to someone to take care of your child who is under the age of 13 or for your spouse or dependent who is unable to care for himself. To qualify, you must incur these expenses of having someone else take care of your dependent only if this allows you to work or to look for work. If you qualify, the credit will be 20 - 30% of your expenses of up to $2,400 for care expenses of one dependent and up to $4,800 of expenses for two or more dependents depending on your income (see chart below.) This credit should not be confused with the Child Tax Credit. To claim credit for child or dependent care, you must use Form 1040 or Form 1040A to file (not Form 1040EZ) and you must meets all of the following requirements:

  • You incur the costs in order to be able to earn income. In the case of married couples, both spouses must work full or part-time jobs, with an exception being made for a spouse who is a full-time student or incapacitated.
  • You pay over half of the household maintenance costs for the individual.
  • If married, you must file jointly.
  • You hire someone other than your child who is under the age of 19, is a dependent of yours or a spouse.
  • You have expenses that exceed the amount of tax-free reimbursements you may have received from your employer for dependent care.
  • You must report the name, address and taxpayer identification number for the care provider.

Keep in mind, if you employ help to care for your dependent in your home, you may be responsible for Social Security (FICA) and unemployment (FUTA) taxes for that employee.

Following is a table of allowable credit percentages per adjusted gross income for 1999:

Adjusted Gross Income Credit Percentage
$10,000 or less 30%
$10,001 - $12,000 29%
$12,001 - $14,000 28%
$14,001 - $16,000 27%
$16,001 - $18,000 26%
$18,001 - $20,000 25%
$20,001 - $22,000 24%
$22,001 - $24,000 23%
$24,001 - $26,000 22%
$26,001 - $28,000 21%
$28,001 and over 20%