Child And Dependent Care Tax Credit - 2021 - CPA Clinics
You are eligible to claim child and dependent care tax credit credit if you, or your spouse if filing jointly, pay someone to care for one or more qualifying persons in order for you to work or look for work, and your income level is within the income limits set for the credit. If you are married, generally both you and your spouse must work or look for work. If you are married, you must file a joint return to claim the credit. However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still claim the credit.
Qualifying expenses. Qualifying expenses include expenses for the care of a child under 13 years old or other dependent who is not able to care for themselves that are incurred so you can work or look for work.
Legislation enacted in March, 2021, expanded the credit and made the credit refundable.
Credit rate. The percentage of your child and dependent care expenses allowed as a credit depends on your income (and your spouse’s income in the case of a joint return). The 2021 credit rate was increased for many low- and moderate-income taxpayers, and declined for the highest-income taxpayers. The maximum percentage of your child and dependent care expenses allowed as a credit is 50%.
Phaseout. The amount of your adjusted gross income (AGI) determines the percentage of your child and dependent care expenses that are allowed as a credit. The 50% amount begins to phase out if your adjusted gross income is more than $125,000, and completely phases out if your adjusted gross income is more than $438,000.
The dollar amounts are the same for all tax filing statuses.