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

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).

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.

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.

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.

No.

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.

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.

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.

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).