How do I know if I qualify for the Child and Dependent Care tax credit?

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The Child and Dependent Care Credit is a nonrefundable tax credit based on expenses incurred for the care of a qualifying person. This care must make it possible for you to work or to seek employment. This credit is based on a percentage of the amount actually paid for care expenses.

Requirements to Claim Credit

You and your spouse, if married, must have earned income during the year.
You pay the care expenses so you and your spouse, if married, can work or seek employment.
You make the care payments to someone you cannot claim as a dependent, and who is not your spouse or a parent of the child.
Your filing status is single, head of household, qualifying widow(er) with dependent child, or married filing jointly.
You are able to identify the person providing the child or dependent care.

Qualifying Expenses

Qualifying expenses are incurred for the well-being and protection of a qualifying person. The expenses must be to provide care for a qualifying person and must be work-related. Work-related care expenses are defined as expenses incurred for the care of the qualifying person while you are working or looking for work.

If you are married, both you and your spouse must work or look for work.

Qualifying expenses include:

Household services, including babysitting, nursery, housekeeping, and other services that are ordinary and usual if they are at least partly for the care of a qualifying person
Expenses related to sending a child to an educational program, if the child is below first grade. Educational programs include nursery school, preschool, or similar programs.
Payments to relatives who are not your dependent and are over the age of 19, not your spouse, and are not the parent of the qualifying person, and the qualifying person is under age 13. Even if the person providing the care is living with you, the expenses qualify if the above requirements are met.

Non-Qualifying Expenses

The cost of transporting the qualifying person from your home to the care location and back.
The cost of sending the qualifying person to overnight camp.
Expenses related to food, clothing, education, and entertainment. However, if these expenses are small amounts and cannot be separated from the cost of caring for the qualifying person, these expenses may be included.

Qualifying Person

A dependent is a person, other than you or your spouse, for whom you claim an exemption and who is a qualifying child or qualifying relative.
The qualifying person must be under the age 13 on December 31, 2012, or disabled (any age).
A person who cannot dress, clean, or feed themselves due to mental or physical problems, or a person who must have constant attention to prevent them from injuring themselves or others.
The child or dependent for whom the credit is claimed must be identified by a taxpayer identification number. This number is generally a Social Security Number, but an Individual Taxpayer Identification Number or Adoption Taxpayer Identification Number may be substituted.

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