Child and Dependent Care Tax Credit
Ask any working parent, particularly a single parent, about childcare and you're likely to hear how expensive it is. For example, the annual average childcare expense ranges from $12,068 in California to $16,430 in Massachusetts [source: Child Care Aware of America].
The good news is the Internal Revenue Service offers a Child and Dependent Care Tax Credit that will reduce the amount of taxes you owe. If you pay someone to care for a child (under age 13) or a dependent with a disability (of any age) so that you can work, look for work or attend school full-time, there's a good chance you'll qualify for a Child and Dependent Care Tax Credit. If you are separated and are the noncustodial parent, the child and dependent care tax credit may not apply.
The amount of Child and Dependent Care Tax Credit you'll receive will vary based on the number of children you have and the amount of qualifying expenses required to care for them. A maximum annual tax credit of $3,000 is available for one child. Two or more children are capped at a $6,000 annual tax credit [source: IRS].