Eligibility

• To qualify for the tax credit, an applicant must claim preschool expenses for a dependent child, must have earned income during the year, must pay child or dependent care expenses to remain employed or look for employment, and must make payments to a child care service provider. Applicants must also identify the care provider, and meet IRS joint filing and benefit reporting requirements.
  
  

Tax Credit Calculation

• The tax credit is calculated as a percentage of an applicant's expenses related to child care. The maximum child care expenses that an applicant can claim is influenced by her adjusted gross income, and earned income limit. An applicant can only claim child care expenses received in the current tax year.
  
  

Work Related Child Care Expenses

• Applicants who receive work-related dependent care benefits may receive a reduced credit. Dependent care benefits include amounts an employer pays directly to an employee for child care while the employee is at work, employer sponsored daycare and pre-tax contributions to a flexible child care arrangement. Employees who receive child care benefits as part of a qualifying employer plan may deduct or exclude these benefits from their income. The minimum deduction or exclusion is $2,500 per spouse or $5,000 per individual, total earned income, or the total child care expenses for the year.
  
  

Application

• To apply for the tax credit, eligible parents must complete the applicable IRS forms. These include the child and dependent care expenses, household employment taxes and the dependent care provider`s identification and certification.