I'm confused by the dependent care expenses section. Does daycare expenses count as dependent care expenses?

[AamilD]

Yes, they do count towards dependent care expenses. However, there are some criteria's which you need to meet to qualify for this credit.

To qualify for the child and dependent care credit:

• You must have paid someone for daycare expenses.
• The child has to be 12 or younger at the end of the year whom you claim as a dependent on your tax return.
• You can take a deduction for any other person claimed as a dependent on our return if that person can't take care of themselves and have lived in your home for at least half the year.

However, to claim the day care expense, that money should not have been paid to your spouse, anyone listed as dependent on your tax return and your own child age 18 or younger

There are some additional requirements:

• You and your spouse if you are married must have earned income. Non work income such as investment income doesn't count
• You must have paid for the care so that you could work or look for work. 
• If married, you must file a joint tax return.
• You must provide the name, address, the taxpayer ID Number or SSN of the person who provided the care.

[mr-history39]

Yes, our 3 year old was in a daycare facility all of 2021 so my wife and I could work.  We're married, filing jointly.  I'm just concerned since when I put the total amount we paid into the dependent care portion, the refund amount went up significantly and I don't remember it going up like that last year.  So didn't know if something changed in claiming dependent care since it added so much onto our refund.  Am I correct that there was a change and that's why the refund amount went up so much?

[Cynthiad66]

@mr-history39 - YES.  There are significant changes to the 2021 Child Care Credit deduction.

First, the maximum percentage for 2021 is bumped up from 35% to 50%. More paid expenses are subject to the credit, too. Instead of up to $3,000 in expenses for one child and $6,000 for two or more, the American Rescue Plan Act allows the credit for up to $8,000 in expenses for one child and $16,000 for multiple kids.

Use this link for more information:  IRS Expanded Credits for Families