With schools out for the summer, parents across the country are setting up other means of childcare. Some parents opt for day camp, others for a nanny or day care center, in most cases though the cost of these options counts towards the Childcare Tax Credit.
The Childcare Tax Credit is worth 20-35% of qualifying expenses subject to a cap. It is interesting to note that while most forms of daily childcare count towards this credit, sleep-away camps do not.
The cap for 2019 is up to $3000 for one child and up to $6000 for two or more children. The actual credit amount will vary depending on household income and the qualifying expenses.
As this is a tax credit, not a deduction, it is a dollar-for-dollar reduction of tax owed.
Qualifying expenses have to be tied to allowing the parent(s) to work or look for work. They also have to be for a relative or dependent child under 13 who lives in your home for more than half the year.
The age limit is lifted if the child is physically or mentally unable to care for themselves and special rules apply if the parents are divorced, separated, or live apart for any other reason.
Taking the Credit
To get the credit, your tax return must have the Social Security Number of each child and identify the organizations or people who provided the care. There may be other requirements as well so it is best to consult a personal tax accountant with specific questions.