The IRS has reminded taxpayers that those who pay expenses for the care of a qualifying person while working or looking for work may qualify for the Child and Dependent Care Credit. The credit has been expanded for tax year 2021. Taxpayers with an adjusted gross income of more than $438,000 are not eligible for this credit. IRS Commissioner Chuck Rettig encouraged qualifying families and others to carefully review the criteria to make sure they receive the maximum amount they’re entitled to. Taxpayers can get a credit worth 50 percent of their qualifying childcare expenses depending on their income. For tax year 2021, the maximum eligible expense for this credit is $8,000 for one qualifying person and $16,000 for two or more. For the purposes of this credit, the IRS defines a qualifying person as:

  • A taxpayer’s dependent who is 12 or younger when the care is provided. There is no age limit if the taxpayer’s dependent is incapacitated.
  • A taxpayer’s spouse who is physically or mentally unable to care for themselves and lived with the taxpayer for more than half the year.
  • Someone who is physically or mentally unable to take care of themselves and lived with the taxpayer for six months and is either the taxpayer’s dependent or would have been the taxpayer’s dependent except for one of the following:
    • The qualifying person received a gross income of $4,300 or more.
    • The qualifying person filed a joint return.
    • The taxpayer or spouse, if filing jointly, could be claimed as a dependent on someone else’s return.

Lastly, taxpayers can use the Interactive Tax Assistant or see the Frequently Asked Questions on IRS.gov to determine if they can claim this credit. The IRS has been highlighting this credit in several ways including IRS social media and outreach channels