What are the advantages of claiming child care, how much do you actually get back if you claim it?

[paulpolavin]

My wife is considering going back to work and we're trying to figure out if it is worth it, as child care will eat up most of her pay.

[Rachel_W · Accepted solution]

If the childcare expenses will eat up most of her pay, the child care credit will not make up for this. The maximum qualifying child care expense per child is $3,000. (For two or more children, the limit is $6,000 ) You get a credit for up to 35% of that amount.  So for one child, the maximum child tax credit is $1,050 [$3,000 x 35% = $1,050] and for 2 or more children, the maximum credit is $2,100 [$6,000 x 35% = $2,100].  If your joint income is over $43,000 your maximum credit for one child is $600 and $1,200 for 2 or more children.

The credit percentage used for the Child & Dependent Care Credit ranges from 20% to 35% of your qualified expenses based on your Adjusted Gross Income (AGI).  For AGI over $43,000 the credit percentage is 20%.

You can check out IRS Pub 503, Page 15, Line 12 for the full Child Care Credit Rate Table:  https://www.irs.gov/pub/irs-pdf/p503.pdf.

Please comment below if you need further clarification.