Credit for Child and Dependent Care Expenses

If you are entitled to claim an income tax credit for child and dependent care expenses on your federal return, you may also claim a tax credit for these expenses on your North Carolina return. The credit will either increase your refund or decrease the tax you owe.

The amount of your credit depends on the age of your dependents, your filing status, the amount of your federal adjusted gross income, and whether your dependents were physically or mentally incapable of caring for themselves. For the tax years 2003, 2004, and 2005, the maximum employment related expenses on which the credit is based is $2,400 for one dependent and $4,800 for two or more dependents. For tax years beginning on or after January 1, 2006, the maximum expenses on which the credit is based is equal to the amounts for federal purposes - $3,000 for one qualifying dependent and $6,000 for two or more qualifying dependents. Note: Child support payments do not qualify as child and dependent care expenses.

To determine the amount of your credit on your state return, you must complete parts 2 and 4 of Form D-400TC. Please refer to the Child and Dependent Care Credit Table on page 17 of the instructions for the percentage to use in determining your credit. Then enter your credit amount on line 19 of Form D-400. Your tax credit cannot exceed your North Carolina income tax.

If you are a nonresident or part-year resident, you must multiply the credit by the decimal amount shown on line 16 of Form D-400. Under certain circumstances, the decimal amount on line 16 can exceed one hundred percent. In these cases, the credit is limited to the amount on line 13 of Form D-400TC.

Be sure to include Form D-400TC (tax credit schedule) when filing your return.

If you are a same-sex couple, see Frequently Asked Questions for Same-Sex Marriage (Question 12).

For tax years beginning on or after January 1, 2014, this credit is no longer available.