Childcare Tax Credit
Host families may be able to deduct up to $5,000 in taxes from their program fee if they have two or more qualifying dependent children who receive care from their au pair or up to $3,000 if they have only one qualifying dependent child.
How to Qualify for The Childcare Tax Credit
- Provider Identification Test. You must identify the care provider on your tax return. (See Care Provider Identification Test, later.)
- If you exclude or deduct dependent care benefits provided by a dependent care benefit plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit because the total amount you can exclude or deduct is limited to $5,000. See Reduced Dollar Limit under How To Figure the Credit, later.) These tests are presented in Figure A and are also explained in detail in this publication.
Who is a Qualifying Person?
Your child and dependent care expenses must be for the care of one or more qualifying persons.
A qualifying person is:
- Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart, later);
- Your spouse who wasn't physically or mentally able to care for himself or herself and lived with you for more than half the year; or
A person who wasn't physically or mentally able to care for himself or herself, lived with you for more than half the year, and either:
- Was your dependent, or
Would have been your dependent except that:
- He or she received gross income of $4,150 or more,
- He or she filed a joint return, or
- You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2018 return.
A dependent is a person, other than you or your spouse, for whom you could claim an exemption. To be your dependent, a person must be your qualifying child (or your qualifying relative). However, the deductions for personal and dependency exemptions for tax years 2018 through 2025 are suspended, and therefore, the amount of the deduction is zero. But in determining whether you may claim a person as a qualifying relative for 2018, the person's gross income must be less than $4,150, not zero.
To be your qualifying child, a child must live with you for more than half the year and meet other requirements.
IRS Childcare Tax Credit Regulations
Please see the IRS Childcare Tax Credit Regulations for additional details. GreatAuPair and its staff are not tax professionals and cannot provide tax or legal advice. This information is being shared for informational purposes only. Please contact your tax and legal advisors as may be necessary for your individual tax and legal matters.