How much is the credit worth?
Basically, the credit works like this: You get a tax credit of between 20 and 30 percent of your qualifying child care expenses, but you can only count expenses of up to $2,400 for one dependent, or up to $4,800 for two or more dependents. Whether you can claim 20 percent, 30 percent, or somewhere in between depends on your adjusted gross income (that is, your net taxable income before subtracting your exemptions or deductions). The following table shows the applicable percentages. Although these figures are not adjusted for inflation each year, the adjusted gross income thresholds, expense percentages, and maximum credits will be increased in 2003 as a result of tax legislation enacted in 2001.
