The child tax credit and the childcare tax credit are two separate and potentially beneficial tax credits if you qualify for one or both of them!
The child tax credit can only be claimed by the parents or guardians of minor children. With the child and dependent care tax credit, it can also be used by those who are caring for aging parents or disabled relatives. This is great information to look into when you're preparing and filing your 2017 tax returns!
Under the Child & Dependent Care Tax Credit, you cannot claim more than $3000 of care expenses for one child/dependent. If you have two or more children/dependents, you cannot claim more than $6000 of care expenses. Technically, there’s no income phase out if you’re trying to claim the CDCTC, but the credit can only equal up to 35% of your qualifying care expenses (depending on your AGI).
What counts as a care expense? Per the IRS rules on the CDCT: “If you paid someone to care for your child, spouse, or dependent last year, you may be able to claim the Child & Dependent Care Credit.” You must have secured a caregiver who you've paid so that you or your husband or wife (if filing jointly) could go to work or hunt for a job.
Filing a claim is as simple as filling out the 2 page IRS Form 2441.
Still confused on the two and some of the major differences? Check out our detailed previous blog post on 2017 Child Tax Credit Guidelines and get the information and forms you need to keep some of that money in your jeans!
We hope this makes things a little less difficult for you but if you have questions reach out to us or a tax professional to get your concerns or queries squared away! Have questions about buying a house in 2018 and what that may mean for you down the road? Give us a call at (303) 757-5424 or send us an email and we'll do what we can for you as we always do.