Important Info

The Child and Dependent Care Credit is a tax credit that can help offset the costs of caring for a child or dependent with disabilities while you work. If you paid someone to care for a child age 12 or younger at the end of the year whom you claim as a dependent on your tax return, you may qualify for the credit. You also may qualify for the credit if you paid someone to care for your spouse or any other person claimed as a dependent on your return, if that person can’t take care of himself or herself and has lived in your home at least half the year1.

You can claim from 20% to 35% of your care expenses up to a maximum of $3,000 for one person, or $6,000 for two or more people (tax year 2023)1. The Child and Dependent Care Credit is a tax credit, rather than a tax deduction. A tax deduction simply reduces the amount of income that you must pay tax on. A $1,000 deduction, for example, might reduce your tax bill by only $150 or $200 depending on your tax bracket. A tax credit, however, directly reduces your taxes, dollar for dollar. A $1,000 tax credit cuts your tax bill by $1,000.

For 2023, the child tax credit is worth $2,000 per qualifying dependent child if your modified adjusted gross income is $400,000 or below (married filing jointly) or $200,000 or below (all other filers). The refundable portion, also known as the additional child tax credit, is worth up to $1,600
 

Taxpayers can claim the child tax credit for the 2023 ax year when they file their tax returns in 2024. Generally, there are seven “tests” you and your qualifying child need to pass: age, relationship, dependent status, residency, financial support, citizenship and income. 

1. Age: Your child must have been under the age of 17 at the end of 2023.
2. Relationship: The child you’re claiming must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister or a descendant of any of those people (e.g., a grandchild, niece or nephew).
3. Dependent status: You must be able to properly claim the child as a dependent. The child also cannot file a joint tax return, unless they file it to claim a refund of withheld income taxes or estimated taxes paid.
4. Residency: The child you’re claiming must have lived with you for at least half the year (there are some exceptions to this rule).
5. Financial support: You must have provided at least half of the child’s support during the last year. In other words, if your qualified child financially supported themselves for more than six months, they’re likely considered not qualified.
6. Citizenship: Per the IRS, your child must be a "U.S. citizen, U.S. national or U.S. resident alien," and must hold a valid Social Security number.
7. Income: Parents or caregivers claiming the credit also typically can’t exceed certain income requirements. Depending on how much your income exceeds that threshold, the credit gets incrementally reduced until it is eliminated.

 Heads up early filers: By law, the IRS can't release a refund for a return claiming the additional child tax credit until mid-February. Filers who use direct deposit as their refund method, e-file, and submit an error-free return should see refunds hit their account by Feb. 27, 2024, says the IRS.
 

2024 Tax Filing Season Opens January 29! 

The Internal Revenue Service has officially declared Monday, January 29, 2024, as the commencement of the nation’s 2024 tax season, marking the date when the agency will initiate the acceptance and processing of 2023 tax returns.

What is the deadline for filing a tax extension?
April 15th is the deadline for requesting an extension, which gives taxpayers until Oct. 18th to file their extended returns for 2023.