How to Claim Child Care Expenses on Your Taxes

You can deduct child care costs through the Child and Dependent Care Credit or by using a Dependent Care Account

The two main ways to reduce your taxes with child care spending are the Child and Dependent Care Credit and the Dependent Care Account (also called a Flexible Spending Account or FSA). The credit is claimed on your tax return after the year ends. The account lets you set aside pre-tax money from your paycheck before you pay taxes on it. You cannot use both for the same expenses — you pick one or split your costs between them.

The credit works if you paid someone to care for a child under 13 while you worked or looked for work. The account works the same way but through your employer's payroll system. Which one saves you more money depends on your income and how much you spend.

You will need receipts, the care provider's name and tax ID number, and proof of your work or job search. The IRS asks for these if you are audited, so keep them for at least three years.

Key Takeaways

The Child and Dependent Care Credit reduces your federal tax bill by up to 20 to 35 percent of your child care costs, depending on your income.
A Dependent Care Account lets you pay for child care with pre-tax money through your employer, which lowers the income taxes you owe.
You cannot claim the same expenses under both the credit and the account — you must choose one method per dollar spent.
may have access to expenses include day care, preschool, after-school programs, and summer camps, but not school tuition or overnight care.
You need the care provider's name, address, and tax ID number (or Social Security number) to claim either option.

How the Child and Dependent Care Credit works

You claim this credit on Form 2441 when you file your tax return. It reduces the amount of federal tax you owe dollar-for-dollar, which is stronger than a deduction. The credit covers 20 to 35 percent of your child care costs, up to $3,000 per year for one child or $6,000 for two or more children. The exact percentage depends on your adjusted gross income — the lower your income, the higher the percentage.

For example, if your income is $15,000 and you spent $3,000 on child care, you could claim a credit of $1,050 (35 percent of $3,000). If your income is $43,000 or more, the credit drops to 20 percent, or $600 on the same $3,000 spent.

You must have earned income during the year — wages, self-employment income, or taxable alimony. If you are married, both spouses usually need earned income, though there are exceptions if one spouse is a full-time student or disabled. You also need the care provider's tax ID number or Social Security number, their address, and the amount you paid them.

Using a Dependent Care Account to pay with pre-tax money

If your employer offers a Dependent Care Account (FSA), you can set aside up to $5,000 per year in pre-tax dollars to pay for child care. This money comes out of your paycheck before federal income tax is calculated, which lowers your taxable income and the taxes you owe.

The account works like this: you decide how much to set aside during your employer's open enrollment period (usually once a year), the money is deducted from each paycheck, and you submit receipts to your employer or the account administrator to be reimbursed. You pay nothing out of pocket if you time it right — the account pays the provider directly or reimburses you after you pay.

The main catch is the "use it or lose it" rule. Any money you do not spend by the end of the year (plus a grace period of up to 2.5 months) is forfeited. This means you need to estimate your child care costs accurately. If you overestimate and cannot spend the money, you lose it.

Expenses that count and expenses that do not

may have access to expenses are costs for someone to care for your child while you work or search for work. This includes day care centers, in-home nannies, after-school programs, and summer day camps. It also covers the cost of meals and transportation provided by the care facility as part of the care.

Expenses that do not count include school tuition (even if the school provides before- or after-school care), overnight camps, babysitting for social events or vacations, and care provided by a spouse or a dependent you claim on your taxes. Kindergarten and first grade tuition do not count, but the cost of before-school or after-school care at the same school does.

If a facility provides both care and education — like a preschool — you can only deduct the care portion. If the facility does not separate the costs, you may need to ask them to estimate what portion is care versus education.

What information you need to gather

Before you file your return or set up an account, collect the following from each care provider: their full name, home or business address, phone number, and either their tax ID number (EIN) or Social Security number. You will also need receipts or statements showing the dates of care, the amount paid, and what the payment was for.

If you paid a nanny or in-home provider, ask them for their tax ID number or Social Security number. If they do not have one, you can use their Individual Taxpayer Identification Number (ITIN). If you paid a day care center or preschool, this information is usually on your receipt or invoice.

Keep all receipts and records for at least three years. The IRS can audit your return up to three years after you file, and you will need to show proof of the expenses and who you paid.

Deciding between the credit and the account

The choice depends on your income and how much you spend. If your income is low (under $25,000), the credit usually saves you more money because the percentage is higher. If your income is higher and your employer offers a Dependent Care Account, the account often saves more because you avoid both federal and state income taxes on the money you set aside.

Run the numbers both ways. Calculate what the credit would be worth using Form 2441, then calculate what you would save in taxes by putting money into the account. Some people split the difference — they use the account for part of their expenses and claim the credit on the rest, as long as the total does not exceed $3,000 or $6,000 depending on the number of children.

If you use the account, you cannot claim a credit on the same money. For example, if you set aside $3,000 in the account and spend it all, you cannot also claim a $3,000 credit. But if you set aside $2,000 and spend it, you can claim a credit on the remaining $1,000 you spent out of pocket.

How to claim the credit on your tax return

You claim the Child and Dependent Care Credit on Form 2441, which you attach to your Form 1040 when you file. The form asks for the care provider's information, the dates of care, the amount you paid, and whether you used a Dependent Care Account. It also asks about your child's name, age, and Social Security number.

If you are married filing jointly, both spouses must have earned income (with limited exceptions). If you are single or head of household, you must have earned income for the year. The form calculates the credit based on your adjusted gross income and the amount you spent.

You can file on paper or electronically. If you file electronically through tax software or a tax preparer, the software will walk you through the questions and calculate the credit for you. If you file on paper, fill out Form 2441 carefully and double-check the care provider's information — errors here are a common reason for audits.

Frequently Asked Questions

Can I claim child care expenses if I am self-employed?

Yes. Self-employment income counts as earned income for the credit. You will need the same information from your care provider and must file Form 2441 with your return. If you have a Dependent Care Account through a business you own, the rules are more complex — consult a tax preparer.

What if my child care provider will not give me their tax ID number?

Ask them directly and explain you need it for your taxes. If they refuse or do not have one, you can still claim the credit using their Social Security number if you have it. If you have neither, you cannot claim the credit for that provider. The IRS matches the information you report, so incomplete information will delay your refund.

Can I claim expenses for care during school breaks and summer?

Yes. Summer day camps and care during school breaks count as long as the child is under 13 and you paid for care so you could work. Overnight camps do not count. Before- and after-school care during the school year also counts.

What happens if I overestimate and do not spend all the money in my Dependent Care Account?

You lose the unspent balance. Most accounts give you a grace period of up to 2.5 months after the year ends to spend the money or submit receipts for expenses from the prior year. After that, any remaining balance is forfeited. Plan conservatively if you are unsure about your child care costs.

Do I need to report the care provider's information if I paid them in cash?

Yes. You must report their name, address, and tax ID number or Social Security number whether you paid in cash, check, or electronic transfer. The IRS requires this information to verify the expenses. Keep receipts or a written record of the dates and amounts paid.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.