Can You Claim Both the Child Tax Credit and the Child and Dependent Care Credit?: Childcare in the United States of America is highly cost-prohibitive for parents, and parents who are also required to return to work often struggle to secure the necessary assistance.
According to Child Care Aware of America, the average US child care cost $10,853 in 2022. The average two-income family spends 10% of its income and a single parent 22%.
State governments receive federal Child Care and Development Block Grant (CCDBG) funding to help low-income working families find child care. Parents who struggle to find child care can receive this money. It misses 15% of qualified pupils.
Learn How to Calculate Your Child and Dependent Care Credit with a Helpful Calculator
Which tax credits are available to assist?
Two tax advantages help young families.
The CDCTC subsidizes child care for working families. The Child Tax Credit (CTC) helps families handle the high costs of childrearing, usually for household expenses.
If they paid for a qualifying individual’s care to help them find job, taxpayers can claim the child and dependent care credit from the IRS. Generally, spouses filing separately cannot get this credit.
One who meets the eligibility criteria for the infant and dependent care credit is:
- Your dependent qualifying child at the time the care was provided, but younger than 13 years old,
- Your spouse who resided with you for over half the year and was physically or mentally incapable of self-care; or
- For the year, you could have claimed a person who lived with you and was physically or mentally incapable of caring for themselves as your dependent if they earned $4,700 or more in gross income, filed a joint return, or were claimed as a dependent on another taxpayer’s 2023 return.
