The tax code has a credit for dependent-care expenses for children under age 13 when the care was provided, and it also can apply to expenses for others of any age who are incapable of caring for themselves—such as an elderly relative. In most years—including 2022—many filers get a credit for 20% of up to $3,000 of eligible expenses for one dependent, or up to $6,000 of expenses for two or more. For very low earners, the credit can be as high as 35% of these expenses.
Just for 2021, however, Congress greatly expanded the Child and Dependent Care credit substantially making it more generous and potentially refundable, up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons. This means an eligible taxpayer can receive this credit even if they owe no federal income tax. Your federal income tax may be reduced by claiming the Credit for Child and Dependent Care expenses on your tax return.
A qualifying person generally is a dependent under the age of 13, a spouse or dependent of any age who is incapable of self-care and who lives with you for more than half of the year.
You may be eligible to claim the child and dependent care credit if you paid expenses for the care of a qualifying individual to enable you and your spouse, if filing a joint return to work or actively look for work and you or your spouse if filing a joint return lived in the United States for more than half of the year. However, special rules apply to military personnel stationed outside of the United States.