Can I Claim the Child Care Expenses in My Taxes?

For unmarried parents, only one parent can claim this income tax benefit in Connecticut

The child care tax credit reduces the tax burden for parents who have work-related child care expenses. A parent can receive a credit for between 20 percent to 35 percent of their work-related child care payments. The maximum amount of child care expenses that can be claimed are capped at $3,000 for one child or $6,000 for two, but that allows for a credit as high as $600 to $1,000 for one child, and twice that for two.

The child care tax credit is one of a few income tax benefits available for parents—others include the dependent exemption and child tax credit. When parents are unmarried or divorced, these benefits must be split between the parents in some way. Whether or not a court order designates a certain parent receive the child care credit may be irrelevant because the IRS has its own rules for which parent can claim the benefit.

Custodial parent gets the credit

The IRS sets the requirements a parent must meet before taking the child care credit. One requirement is that only the “custodial” parent can claim the benefit. Under IRS rules, the custodial parent is the parent with whom the child lived for the greater number of overnights during the year. The other parent is the noncustodial parent. A child is treated as living with a parent for a night under any of the following situations:

  • The child sleeps at that parent's home
  • The child sleeps at that parent’s home and the parent is not present
  • The parent and child are together but away from the parent’s home (for example on vacation together)

There is an exception available for a parent who works at night. If the child lived with each parent for an equal number of overnights during the year, the custodial parent is the parent with the higher adjusted gross income.

For a “qualifying” child

Child care expenses can only be claimed for a “qualifying” child. Under IRS rules a qualifying child is a child that was 12 years of age or younger (with some rare exceptions) when the child received the care. The qualifying child must also be the parent’s dependent—meaning the parent can claim the child as an exemption on their income tax return.

Parent must have earned income

Another requirement to claim the child care tax credit is that the claiming parent (and their spouse if filing jointly) must have earned income during the year. That means that the parent must have worked for at least a minimal amount of time during the year. Parents should consult IRS publications to determine whether they meet the earned income requirements under the law. Earned income will not include:

  • Workers compensation payments
  • Pensions or annuity payments
  • Social security benefits
  • Interest and dividends
  • Unemployment compensation
  • Scholarships or fellowship grants

Child care costs must be work-related

Child care costs incurred for date nights will not qualify. To qualify, the child care costs must have been incurred to allow a parent (and their spouse if filing jointly) to work or to find employment. The work can be full or part-time. It can also include self-employment. Child care costs can be included for periods of time a parent is looking for work—but if the parent doesn’t find a job and earns no income for the tax year, the parent can’t take this credit.

Parents may want to consult with the other parent to determine who will claim the child care tax credit. If there is a dispute over the credit, the parents may need to go to court to resolve the dispute. Parents in this situation should seek out an experienced Connecticut family law attorney to discuss their options.

For more information on this area, see our overview of family law.

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