Deductions & credits

The changes to the credit for child and dependent care expenses for 2021 have expired. 

For 2022, the credit for child and dependent care expenses is nonrefundable and you may claim the credit on qualifying employment-related expenses of up to

·        $3,000 if you had one qualifying person, or

·         $6,000 if you had two or more qualifying persons.

The maximum credit is 35% of your employment-related expenses. The more you earn the lower the percentage of employment-related expenses that are considered in determining the credit. 

Once your adjusted gross income is over $43,000, the maximum credit is 20% of your employment-related expenses 

Tests you must meet to claim a credit for child and dependent care expenses. To be able to claim the credit for child and dependent care expenses, you must meet all the following tests.

1. Qualifying Person Test. The care must be for one or more qualifying persons who are identified on Form 2441. (See Who Is a Qualifying Person, later.) 
2. Earned Income Test. You (and your spouse if filing jointly) must have earned income during the year. (However, see Rule for student-spouse or spouse not able to care for self under You Must Have Earned Income, later.) 
3. Work-Related Expense Test. You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. (See Are These Work-Related Expenses, later.) 
4. You must make payments for child and dependent care to someone you (and your spouse) can't claim as a dependent. If you make payments to your child (including stepchild or foster child), he or she can't be your dependent and must be age 19 or older by the end of the year. 
5. You can't make payments to: 
   1. Your spouse, or
   2. The parent of your qualifying person if your qualifying person is your child and under age 13.

Also see:  IRS Publication 503 Child and Dependent Care