Child and Dependent Care Tax Benefits: How They Work and Who Receives Them

Child and Dependent Care Tax Benefits: How They Work and Who Receives Them.  Congressional Research Service, Library of Congress. Margot L. Crandall-Hollick. March 1, 2018

 Two tax provisions subsidize the child and dependent care expenses of working parents: the child and dependent care tax credit (CDCTC) and the exclusion for employer-sponsored child and dependent care. The child and dependent care tax credit is a nonrefundable tax credit that reduces a taxpayer’s federal income tax liability based on child and dependent care expenses incurred. The policy objective is to assist taxpayers who work or who are looking for work. A taxpayer must meet a variety of eligibility criteria including incurring qualifying child and dependent care expenses for a qualifying individual and have earned income.

 [PDF format, 21 pages].

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