Tax Credits You Might Be Missing
Child Tax Credit & Child and Dependent Care Credit Explained
Two different credits for families with kids — and yes, you can often claim both.
6 min read
People mix these up all the time. They sound alike, but they're two separate credits with two separate rulebooks. Many families qualify for both in the same year.
The Child Tax Credit (CTC)
This is a credit for having a qualifying child under age 17 at the end of the year. It's currently worth up to $2,000 per child. Part of it (up to about $1,700) is refundable, meaning you can get it back even if you owe no tax.
Basic rules for each child:
- Under 17 at the end of the year.
- Your son, daughter, stepchild, foster child, sibling, or a descendant of any of them.
- Lived with you more than half the year.
- You provided more than half their support.
- Has a valid Social Security number.
A quick example
The Johnsons have two kids, ages 4 and 9. Both have Social Security numbers and lived with them all year. Their Child Tax Credit is up to $2,000 x 2 = $4,000 off their tax bill.
The Child and Dependent Care Credit
This one is different. It's for money you paid to someone else to watch your child (or another dependent who can't care for themselves) so you could work or look for work.
What counts:
- Daycare and preschool
- Before- and after-school programs
- Summer day camp (not overnight camp)
- A nanny or babysitter
You can count up to $3,000 of expenses for one child, or $6,000 for two or more. The credit is a percentage of that — usually between 20% and 35% depending on your income.
A quick example
The Reyes family paid $8,000 in daycare last year for their toddler. They can count $3,000 of that. At the 20% rate, that's a $600 credit — money taken straight off their tax bill.
One thing that trips people up
You must have the care provider's name, address, and taxpayer ID (usually a Social Security number or EIN). Without those, the IRS won't allow the credit — even if you paid every dollar in cash. Ask your provider in January, not April.
When to get professional help
Consider working with an Enrolled Agent or CPA if any of these sound like you:
- You share custody and aren't sure which parent claims the child this year.
- You paid a relative to babysit and don't know if it counts.
- Your employer offered a dependent care FSA and you're not sure how it interacts with the credit.
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