Tax Tips: Claiming the Child Care Credit

Taxpayers can receive a direct reduction in their income taxes with the Child Care Credit. The credit may be up to $3,000 for one child or up to $6,000 for two or more children, and is given for qualified daycare or child care expenses.

To claim the credit, you must fill out Form 2441, which requires you to give the name, address, and taxpayer identification number of the child care provider. Your daycare center should give you this information. If your child is cared for in someone's home, you will need to request their information and social security number. In order to claim the credit, the taxpayer (and the spouse, if married) must also have earned income. As the taxpayer's income increases, the amount of the credit is reduced.

Tuition and fees at schools are not qualified expenses for purposes of this credit, however certain school programs could qualify. For example, if you pay for your child to participate in an after-school program because you need care for him after school, this will likely qualify for the Child Care Credit.

Details on the Child Care Credit can be found in IRS Publication 503.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.