The tax code recognizes that many parents cannot work or attend school unless they can arrange for child care. The Child and Dependent Care Credit addresses this need by giving a partial tax credit to parents based on their child care expenses.The term “credit” means that dollars are subtracted directly from the taxes owed after figuring any other income and deductions. The actual credit ranges from 20 to 35 percent of your child care cost, with lower income taxpayers deducting a higher percentage. Up to $3000 of expenses for one child or $6000 for two or more children may be used to figure your credit. This is a non-refundable credit, meaning that the maximum amount you can deduct is limited to the amount of tax you owe. If all your tax liability is removed by this or any other credit, then you pay zero income tax for the year.Single parents, and especially single fathers, can use this credit to great advantage. You must be working, looking for work or be a full-time student to qualify. Couples where both spouses work or go to school also qualify, but couples with a stay-at-home spouse do not.As with any tax benefit, there are plenty of rules and restrictions. To begin with, the child receiving the care must be 12 years old or younger or permanently disabled. The care must be needed for you to work or attend school. Hiring babysitters to allow you go to social events does not qualify.

The credit is claimed on your annual tax return using Form 2441. You report the name and tax ID number of the provider, the children who receive the care and the amount paid for each child. If your provider is a friend, relative or independent provider with no Federal tax ID number, you must identify the provider’s Social Security number on your own return. Your payments are considered income to the provider, who must then account for it on their own taxes.

Some employers provide pre-tax child care benefits to employees. If you are lucky enough to have this benefit, then your advantage comes up front, since you never pay tax on the money used for child care. For example, if your child care cost is $6000 and your employee benefit is $5000, then you can claim the tax credit based on the remaining $1000 paid out of pocket.

Traditional day care is the not the only service that qualifies for this credit. After-school programs are also acceptable, as are summer day camp expenses. Just remember the overriding rule that the taxpayer must be working or going to school while the child is receiving care.

Single fathers interested in this credit are primarily concerned with the children living with them. However, the “Dependent Care” portion includes care for elderly or disabled relatives whom the taxpayer supports.

IRS Publication 17, chapter 32 and IRS Publication 503 have complete details about this important tax benefit for working parents.