The Internal Revenue Service released updated frequently asked questions this week on the child and dependent care credit for the 2024 tax year. The agency stated that the new guidance clarifies who qualifies, which expenses can be claimed, and how taxpayers should file to reduce their federal income tax bills.
The dependent care credit is designed to offset expenses that families incur for childcare and dependent care, enabling them to work or seek employment. Unlike a deduction that reduces taxable income, the credit directly lowers the tax bill. For the 2024 tax year, taxpayers may claim up to $3,000 in qualifying expenses for one child or dependent, or up to $6,000 for two or more children.
The credit equals 20% to 35% of those expenses, depending on adjusted gross income. This means the maximum amount of the credit is $1,050 for one child and $2,100 for two or more dependents. The IRS noted that the credit applies only to paid expenses made during the tax year and must be supported by documentation when the tax return is filed.
The IRS guidance states that a qualifying person can be a child under age 13, a spouse who is mentally or physically unable to care for themselves, or another dependent who is unable to provide self-care and lives with the taxpayer for more than half of the year.
To qualify for the credit, taxpayers must have earned income and generally must file a joint return with their spouse. Special rules apply to divorced or separated parents, as well as those who are legally separated or married filing separately. The amount of qualifying expenses cannot exceed the taxpayer’s earned income or the spouse’s earned income if filing jointly.
The IRS emphasized that accurate information is required when filing. Taxpayers must list the social security number of the qualifying person and provide the taxpayer identification number or employer identification number of the care provider. These details are entered on Form 2441, which must be attached to the tax form.
The IRS outlined which care expenses may be included when claiming the credit. Allowable costs cover daycare centers, preschool programs, before- and after-school care, and payments to a nanny or other household employees serving as a care provider. Summer day camps are also considered eligible, but overnight camps and private school tuition for kindergarten or higher grades do not qualify.
In an August 2024 release, the agency noted, “Unlike overnight camps, the cost of day camp may count as an expense towards the Child and Dependent Care Credit.” Expenses must be directly related to enabling the taxpayer to work or attend school and must be paid during the tax year in which they are incurred. Families are encouraged to keep receipts and documentation for all qualifying expenses to support their claim.
The updated IRS guidance is expected to help millions of households manage the high cost of child and dependent care. By claiming the credit correctly, families can secure a direct tax break that reduces their overall tax bill rather than just lowering taxable income. This can provide meaningful relief, especially for working parents balancing employment with childcare expenses.
The IRS advises taxpayers to prepare early by reviewing eligibility requirements, gathering details on care providers, and confirming their filing status. Resources such as Publication 503 and the Interactive Tax Assistant are available to guide families through the process. With the federal filing deadline approaching, the agency emphasized that accurate reporting of paid expenses and provider information is essential to avoid delays in receiving benefits.
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