Federal and State Child and Dependent Care Tax Credit (CDCTC)

What is the Child and Dependent Care Tax Credit (CDCTC)?
The Federal Child and Dependent Care Tax Credit (CDCTC) helps offset some or all of the expenses paid to someone to care for your child or children when you work or look for work. The credit is non-refundable, meaning it only lowers your federal taxes owed, but is not returned to you as a cash refund.
The CDCTC is administered by the Internal Revenue Service (IRS).
Who can get the CDCTC?
To be eligible for the CDCTC you must have paid for child or dependent care for one or more qualifying persons in the tax year for which you’re claiming the credit. A qualifying person is your child or relative who was a dependent living with you half of the year or more and was under age 13 or mentally or physically unable to care for him or herself when the care was provided.
How much money is the CDCTC worth?
The amount the credit is worth depends on your income and your qualifying child and dependent care expenses and is capped by the amount you owe in federal taxes.
Is the CDCTC a refundable credit; in other words, can I get cash back?

The federal CDCTC is a non-refundable tax credit, meaning that it only reduces the amount of tax you owe. It is NOT refundable in the form of a cash refund. However, the Minnesota CDCTC is a refundable credit, meaning you may receive some or all of the credit in the form of a refund (cash back in your pocket).


What counts as child and dependent care costs for the CDCTC?

Child and dependent care costs include payments to a person or business for providing care to the qualifying child/dependent while the person(s) claiming the credit is working or looking for work, in school, or unable to physically or mentally care for him or herself. If married, generally, both spouses have to be working, looking for work, or going to school to be able to claim the credit.


What are the income limits for the CDCTC?

There is no income limit to claim the federal CDCTC. However, there is an income limit to claim the Minnesota CDCTC. For Tax Year 2012, filers earning more than $37,950 are not eligible for the Minnesota CDCTC.


Do I have to be a U.S. Citizen to get the CDCTC?

No. Legal immigrants can also get the CDCTC, but you have to file your taxes with a Social Security Number (valid for work) for yourself, your spouse (if you have one) and your qualifying children to get it.


Are there any asset limits for the CDCTC?



If I am on the Child Care Assistance (CCAP) program, can I still receive the CDCTC?

Yes. If you are enrolled in the CCAP you can still receive the CDCTC. The amount you pay in CCAP co-payments for the tax year is your qualifying care expense used to determine the amount of your credit.


What documents or information do I need to provide as verification to claim the federal CDCTC?

To claim the federal CDCTC, you will need to provide the name, address, and tax identification number of the care provider. If the care provider is an individual, the tax identification number is his or her Social Security Number or individual taxpayer identification number. If the care provider is an organization, like a for-profit daycare center, provide the employer identification number. If the care provider is a tax-exempt organization, like a school or church, you do not need to provide a number; instead, just write “tax-exempt” where it asks for a number.


If I have a dependent care benefit plan, can I still get the CDCTC?

You can still receive the federal and state CDCTC if you have a dependent care benefit plan providing you pay an additional amount in qualifying child or dependent care expenses. The maximum amount of expenses you can deduct is reduced by the amount of dependent care benefits.


Where can I get my taxes done (file my taxes)?

There are several locations across Minnesota where you can get your taxes done for free. For AccountAbility Minnesota's free tax preparation sites click here. For other free tax preparation sites in Minnesota click here or call United Way 2-1-1 by dialing 2-1-1 (651-291-0211 for cell phone users).