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.
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).
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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.
For more information, see IRS Publication 503 Child and Dependent Care Expenses.
-
Tax-Deductible Home Improvements for Retirement in 2025Retirement Taxes Your aging-in-place plan could benefit from the medical expense tax deduction. But watch out for capital gains and property taxes.
-
New Colorado Tax Credit: What’s the Scoop?State Tax Everything you need to know about the Colorado family affordability tax credit in 2025.
-
Key Family Tax Breaks Are on the GOP Chopping Block This YearTax Credits Several tax breaks, including the Child Tax Credit, may face reforms or be cut entirely as lawmakers seek revenue for Trump’s tax plans.
-
What's Going on With New Jersey Property Tax Programs?Property Tax ANCHOR and ‘Senior Freeze’ just got a refresh, and there’s a new program: Stay NJ. Learn how to save on New Jersey property taxes.
-
Five States With the Largest EITC ChecksEITC Households in these states received a larger Earned Income Tax Credit (EITC) last year.
-
Downsize in Retirement With 2025 Tax Benefits: Three Key StrategiesRetirement Taxes Downsizing retirees may benefit from tax savings, lower utility bills, and freed-up income. But could a new presidency impact your home sale?
-
Gov. Hochul Vows to Deliver $1 Billion in Tax Relief to New YorkersState Tax The proposed tax cuts would benefit New York middle-class families.
-
Maryland Property Tax Assessment: What It Means for YouState Tax Amid a growing deficit, Maryland property values are rising. Here’s more of what to know.
