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Tax Breaks

Claiming the Child-Care Credit for Preschool Costs

Find out whether you qualify for a tax break to help offset the cost of child care.

I moved my 4-year-old son from day care to a preschool program at a private school this month. Does the cost of preschool still count for the child-care tax credit?

Yes, the cost of preschool can still count toward the child-care credit -- just like the cost of day care, a nanny or babysitter, and day camp in the summer and during holidays. The cost of school doesn’t count once your child reaches kindergarten, but the cost of before-school and after-school care can qualify until your child reaches age 13, if you pay for the care so you can work.

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To take the credit, both you and your spouse must work (or be looking for work). You can also qualify if one spouse is a full-time student and the other is working. The total credit depends on your income. Families earning less than $15,000 can claim a credit for up to 35% of eligible expenses. The percentage gradually decreases to 20% of eligible costs for families earning more than $43,000 (there is no maximum income limit).

You can claim up to $3,000 in eligible child-care expenses for one child or up to $6,000 for two or more children, but the actual credit equals $600 to $1,050 if you have one child, or $1,200 to $2,100 if you have two or more children. It is a tax credit, rather than a deduction, so it lowers your tax liability dollar for dollar.

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