2016 Child and Dependent Care Credit
For 2016, the Child and Dependent Care Credit is 35% (Maximum rate), $3,000 (Expense limit, one person) and $6,000 (Expense limit, two or more people).
Effective 2016-01-01Source: Publication 503 (2016), Child and Dependent Care Expenses (IRS)Verified 2026-09-01
Who it applies to
Taxpayers who paid for the care of a qualifying person in 2016 so they could work or look for work.
What changed this year, and why
The 2016 Child and Dependent Care Credit allows a maximum credit rate of 35% of eligible work-related expenses. Taxpayers may count up to $3,000 of expenses for one qualifying person or $6,000 for two or more qualifying persons.
Common questions
- How much child care expense can I count toward the credit?
- For one qualifying person, the limit is $3,000. For two or more qualifying persons, the limit is $6,000.
- What is the maximum credit rate?
- The maximum rate is 35%. The percentage decreases as adjusted gross income rises.
The credit cannot exceed what you earned
For 2016, the work-related expenses you count toward the credit cannot exceed what you actually earned during the year. If you are single when the year ends, the cap is your own earned income. If you are married when the year ends, the cap is the smaller of your earned income or your spouse's earned income, and you must use the spouse's full-year earnings even if you were married for only part of the year. This earned income cap is applied after you have reduced your expenses by any employer-provided dependent care benefits you excluded and after applying the dollar limit. It is a separate test from the $3,000 or $6,000 expense limit and from the credit percentage, which tops out at 35%. If your earned income (or, when married, the lower of the two spouses' earned incomes) is less than your qualifying expenses, the credit is computed on that smaller earned-income figure rather than on the full expenses. Community property laws are disregarded, and self-employment net earnings are included as earned income for this purpose.
5. Joint Return Test. Your filing status may be single, head of household, or qualifying widow(er) with de- pendent child. If you are married, you must file a joint return, unless an exception applies to you. See What’s Your Filing Status, later. 6. Provider Identification Test. You must identify the care provider on your tax return. (See Care Provider Identification Test, later.)
Publication 503 (2016), Child and Dependent Care Expenses (IRS)
The exception for a student or disabled spouse
If your spouse had little or no earned income in 2016, you may still be able to treat that spouse as having earned income for purposes of the credit, provided the spouse meets one of two conditions. Your spouse is treated as having earned income for any month during which the spouse was either a full-time student or physically or mentally not able to care for himself or herself. In the case of a spouse who is not able to care for himself or herself, the spouse must also have lived with you for more than half the year. If you are filing a joint return, the same rule applies to you: you can be treated as having earned income for any month you are a full-time student or not able to care for yourself. The imputed earned income is figured at a statutory monthly amount, and the rule applies to only one spouse for any given month. This special rule prevents a working spouse from losing the credit simply because the other spouse was in school or disabled rather than working. Even with this rule, the overall expense cap is still $3,000 for one qualifying person or $6,000 for two or more, and the credit rate is up to 35%.
Rule for student-spouse or spouse not able to care for self. Your spouse is treated as having earned income for any month that he or she is: 1. A full-time student, or 2. Physically or mentally not able to care for himself or herself. (Your spouse also must live with you for more than half the year.)
Publication 503 (2016), Child and Dependent Care Expenses (IRS)
Married couples generally must file jointly
To claim the federal Child and Dependent Care Credit for 2016, a married taxpayer generally must file a joint return. The Joint Return Test permits single, head of household, or qualifying widow(er) with dependent child filing statuses, but if the taxpayer is married, the return must be filed jointly unless a specific exception applies. A taxpayer who is married and files separately does not qualify for the credit, unless they meet one of the recognized exceptions to the joint return requirement. The credit is calculated using a maximum rate of 35%, applied to work-related expenses up to $3,000 for one qualifying person or $6,000 for two or more qualifying persons.
5. Joint Return Test. Your filing status may be single, head of household, or qualifying widow(er) with de- pendent child. If you are married, you must file a joint return, unless an exception applies to you.
Publication 503 (2016), Child and Dependent Care Expenses (IRS)
You must name the provider, or show due diligence
You must identify every person or organization that provided care for your child or dependent on your tax return, using Form 2441, Part I. For each provider you must list the provider's name, address, and taxpayer identification number. If the provider is an individual, the identification number is a social security number or individual taxpayer identification number; if it is an organization, you use its employer identification number. Tax-exempt organizations such as churches and schools are excepted from the number requirement - you simply enter "Tax-Exempt" in the space where the form asks for the number. If you cannot supply all of the information, or if some of it is incorrect, you must be able to show that you used due diligence in trying to obtain the right information from the provider. Form W-10 is available to request the details, and you should keep the documentation with your tax records rather than sending it to the IRS. Failure to identify the provider, or to show due diligence, can cause the IRS to disallow the credit for the expenses tied to that provider.
Care Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. Use Form 2441, Part I, to show the information.
Publication 503 (2016), Child and Dependent Care Expenses (IRS)
Employer benefits shrink the expense limit
If your employer provided dependent care benefits that you excluded from income - for example, through a dependent care flexible spending account or a cafeteria plan - you must reduce the dollar limit you would otherwise use to figure your credit. The reduced limit is the regular limit minus the amount of benefits you excluded or deducted, and the calculation is done on Form 2441, Part III. For 2016, the regular limit is $3,000 if one qualifying person was cared for and $6,000 if two or more qualifying persons were cared for. So a taxpayer with one child who excluded a portion of employer-provided dependent care benefits would have a reduced dollar limit below $3,000, even though the taxpayer paid more than that in out-of-pocket expenses. If the excluded benefits equal or exceed the regular limit, the dollar limit is reduced to zero and no credit is available on the expenses that were paid out of pocket. The credit rate, up to 35%, is then applied to the reduced expense base. Because the exclusion and the credit both draw from the same limit, receiving employer benefits can significantly shrink the amount of expenses that qualify for the credit.
Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. Your re- duced dollar limit is figured on Form 2441, Part III. See Dependent Care Benefits, earlier, for information on ex- cluding or deducting these benefits.
Publication 503 (2016), Child and Dependent Care Expenses (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Publication 503 (2016), Child and Dependent Care Expenses (IRS)
- Maximum rate
The credit can be up to 35% of your expenses.
- Expense limit, one person
This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons.
- Expense limit, two or more people
If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000.