If you just signed a child up for summer day camp so you can keep working, hold on to that receipt. Day camp is one of the expenses that can count toward the child and dependent care credit, and this year the credit is worth more than it has been in decades.

The credit gives back a percentage of what you pay someone to care for a child under 13, or for a spouse or other dependent who can’t care for themselves, so that you can work or look for work. It’s claimed on Form 2441, filed with your regular tax return. The rules have several moving parts, but they line up in a sensible order. Here’s each step, using the current rules from the IRS.

Step 1: Make sure the person you’re paying for qualifies

Under the IRS’s rules, a qualifying person is one of three things: your dependent child who was under age 13 when the care was provided; your spouse, if they were physically or mentally incapable of self-care and lived with you more than half the year; or another person incapable of self-care who lived with you more than half the year and was your dependent (or would have been, except for the income or joint-return tests).

That middle and last category matter for a lot of families. If you pay for adult day care for a parent who lives with you and qualifies as your dependent, those costs can count too. This is not only a credit for parents of young kids.

Step 2: Check that the expense is really “work-related”

The care has to exist so that you, and your spouse if you file jointly, can work or actively look for work. If one spouse stays home and isn’t a full-time student or incapable of self-care, the expenses generally won’t qualify.

What counts: day care centers, preschool and nursery school below kindergarten, a babysitter or nanny, before-school and after-school care, and summer day camp, even a camp built around one activity like soccer or coding. What doesn’t count, per IRS Publication 503: overnight camp, tutoring, private school tuition for kindergarten and above, and expenses that are really for schooling rather than care.

Step 3: Get your provider’s information now, not in April

Form 2441 requires the name, address, and taxpayer identification number of every care provider, either a Social Security number or an employer identification number. A tax-exempt provider such as a church program only needs to give a name and address. The IRS has a standard form, W-10, you can hand a provider to collect this, and a summer camp’s front desk is much easier to reach in June than in February.

One rule trips up family arrangements: the provider can’t be your spouse, the child’s parent, your own child under age 19, or anyone you claim as a dependent. Paying grandma is fine, as long as she isn’t your dependent, and she’ll need to report the income.

Step 4: Apply the dollar limits

Three limits stack on top of each other. First, the expense cap: you can count no more than $3,000 of expenses for one qualifying person, or $6,000 for two or more. Second, the earned-income limit: your countable expenses can’t exceed the smaller of your earned income or your spouse’s. (A spouse who is a full-time student or incapable of self-care is treated as earning $250 a month, or $500 with two or more qualifying persons.) Third, if you get dependent care benefits through work, usually a dependent care FSA, those pre-tax dollars reduce the expense cap dollar for dollar.

Then a percentage is applied to whatever survives those limits, and the percentage depends on your adjusted gross income. For 2025 returns, the rate ran from 35 percent at the lowest incomes down to 20 percent. Starting with tax year 2026, the return you’ll file next spring, the 2025 tax law raises the top rate to 50 percent of qualified expenses for lower-income households. The rate steps down as AGI rises above $15,000, holds at 35 percent through the middle of the income range, and settles at 20 percent for higher earners. Nobody gets less than 20 percent.

Put together, that means the maximum credit for 2026 is $1,500 for one qualifying person and $3,000 for two or more at the 50 percent rate, and even a high-income family with $6,000 of expenses and two kids in day care still gets $1,200 at the 20 percent floor.

Step 5: Coordinate with a dependent care FSA

If your employer offers a dependent care FSA, you can set aside money pre-tax for the same kinds of expenses, and the same 2025 law raised that exclusion from $5,000 to $7,500 starting in 2026 ($3,750 if married filing separately). You can’t double-dip: FSA dollars come off the credit’s expense cap first. A family with two kids and $7,500 run through an FSA would have nothing left under the $6,000 cap to claim as a credit. Which route saves more depends on your tax bracket and income, so it’s worth running both ways before your benefits enrollment locks in.

Step 6: File Form 2441 with your return

The form attaches to Form 1040. If your W-2 shows dependent care benefits in box 10, you must complete Part III of the form even if you’re not claiming the credit. Two more things to know: the credit is nonrefundable, meaning it can reduce your tax bill to zero but won’t generate a refund beyond that, and taxpayers who are married filing separately generally can’t claim it at all, with narrow exceptions for spouses living apart described in Publication 503.

Not sure whether your situation qualifies? The IRS has a short interactive tool, “Am I eligible to claim the child and dependent care credit?”, that walks through the tests in a few minutes. Answer honestly, save your receipts, and get that provider tax ID before camp season ends.

This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.