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​​​​Child and Dependent Care Enhancement Tax Credit

Pennsylvania offers a state tax credit that can help ease child and dependent care costs for working families. Eligible Pennsylvanians can claim the Child and Dependent Care Enhancement Tax Credit when they file their Pennsylvania Personal Income Tax Return (PA-40). This credit can range between $600 and $2,100, depending on your income level and the number of your dependents.

The Child and Dependent Care Enhancement Tax Credit that is available to Pennsylvanians is based on the federal Child and Dependent Care Tax Credit. That means that taxpayers must receive the federal credit to also be eligible for the state credit in Pennsylvania. The state credit is equal to 100 percent of the federal credit, meaning it will be: 

  • The maximum credit will be $1,050 (one child/dependent) or $2,100 (two or more children/dependents​)
  • The credit cap phases down as income levels increase.
  • The minimum credit will be $600 (one child/dependent) or $1,200 (two or more children/dependents), provided expenses are at least $3,000 per child/dependent.

Eligibility Requirements

The Pennsylvania credit follows the requirements of section 21 the Internal Revenue Code and all regulations promulgated under section 21 of the Internal Revenue Code.  In general, married persons must file a joint return to claim the credit.

If a taxpayer is married at the close of the tax year, the child and dependent care credit is allowed only if the taxpayer and spouse file a joint return.

Persons Divorced or Separated

An individual is not considered married if the individual is legally separated from his or her spouse under a decree of divorce or of separate maintenance.

Persons Living Apart

However, you are considered unmarried for purposes of claiming the credit if your filing status is married filing separately and all of the following apply:

  • you are married;
  • you file a separate return;
  • you maintained as your home a household that is the principal abode of a qualifying individual for more than one-half of the tax year;
  • you furnished over one-half of the cost of maintaining that household during the tax year; and
  • your spouse is not a member of that household during the last six months of that tax year.

If you meet all of the requirements to be treated as unmarried, you can generally take the credit. However, if you do not meet all of the requirements to be treated as unmarried, you cannot generally take the credit.

Who Qualifies

In order to claim the credit on your PA Personal Income Tax Return (PA-40), you must have incurred care expenses for:

  • A dependent child under age 13.
  • A spouse who was physically or mentally incapable of self-care and lived with you for more than half the year.
  • An individual who was physically or mentally incapable of self-care, lived with you for more than half the year, and either:
    • Was your dependent; or
    • Could have been your dependent, except that he or she received gross income of $4,400 or more, filed a joint return, or could have been claimed as a dependent on another taxpayer's return.

This credit is refundable, meaning qualified taxpayers will not owe any state taxes on the amount they receive.

How to Apply

 

​When filing your PA Personal Income Tax Return (PA-40), you will need to complete PA Schedule DC, an additional form that allows you to report information related to your dependents and the expenses incurred for their care. Additionally, you must attach completed versions of Federal Form 2441 and 1040 Schedule 3 to your PA-40. These forms are required to claim the federal Child and Dependent Care Tax Credit on the federal Individual Income Tax Return (Form 1040).

One easy way to file your PA-40 and the Schedule DC is to use myPATH, the Department of Revenue's free online filing system. This system is user friendly and walks​​ the taxpayer through all the necessary steps for filing your PA return.

For example, myPATH​ will prompt the taxpayer with a question that asks whether they paid child or dependent care expenses. That's when they'll be able to enter the necessary information that will automatically fill out the Schedule DC on their behalf. There will also be an option to upload the completed federal forms — 2441 and 1040 Schedule 3 — before completing the submission of your PA return.