The name of the credit is Child and Dependent Care Credit.
The amount of your work-related expenses you can use to determine your credit is a dollar cap. For one qualified person, the cap is $3,000, or $6,000 for two or more qualified individuals.
If you have paid work related expenses for caring for two or more qualified persons, the dollar limit applicable is $6,000. There is no need to split the cap equally between them. For example, if one qualified person’s work-related expenses are $3,200 and another qualifying person’s work-related expenses are $2,800, you can use a total of $6,000 when calculating your credit.
The cap for the year. The dollar limit is the yearly limit. The dollar cap remains the same no matter how long your household has a qualified person in the course of the year. Use the $3,000 cap if, at any point during the year, you have charged job related expenses to care for a qualified person. Use $6,000 if over the year you have paid work related expenses to care for more than one qualified person at any time.
Example: You pay $500 a month for an after-school care for your son. On May 1 he turned 13, and is no longer a qualified person. Between January to April, you can use the $2,000 of your care costs to determine your bonus, as this is no more than the $3,000 annual limit.
Example: In July of this year you enrolled your 3-year-old daughter in a nursery school which provides pre-school childcare to enable your spouse to start a new job. For child care you paid $300 a month. You can use the entire $1,800 you charged ($300 for about 6 months) as a deductible expense as it does not surpass the $3,000 annual limit.
