In general, this credit lowers your taxes or increases the amount of your refund. With the federal credit you do not get more of the credit than you owe in taxes as you do with EITC and CTC; however, the state credit is refundable and you can get it even if you owe no taxes.

The care provider can be a center-based program, a family-based program, a neighbor or family member as long as you paid for it.

Who is eligible?
The federal credit is available to anyone who paid for child or dependent care in order to work, look for work or attend school and had enough income to pay taxes. Generally, the lower your income and the higher your expenses, the more credit you will receive. The federal credit can be worth up to $2,100 for 2 or more children or dependents and up to $1,050 for one child or dependent.

The state credit differs from the federal credit. The most important difference is you can claim it even if you did not earn enough to owe taxes. Also, there is an income limit. Families must earn less than $100,000 to claim the credit.

Can I get the credit if I get EITC and CTC?
YES!If you are eligible for all 3 credits, you should claim all three. It may seem like a lot of paper work but in the end you could end up receiving a larger refund from both the federal and state governments.

How do I apply?
Applying for the federal credit is similar to the CTC; you must use the federal Form 1040 or 1040A. You will also need to file Form 2441. You will need to provide information about the child or dependent care provider such as name, address and tax ID number or Social Security number unless the provider is tax exempt. If the provider will not give that information, write “noncompliant with request” on Form 2441.

Applying for the state credit, you will need to complete Form 540 or 540A. You will also need to complete Form FTB 3506 and attach it to your return. Form FTB 3506 will ask information about the care provider similar to the federal form.

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