Not Just for Kids: Child and Dependent Care Credit Benefits for Adult Care

Authors

Gabrielle Pepin, W.E. Upjohn Institute for Employment ResearchFollow
Yulya Truskinovsky, Wayne State UniversityFollow

Upjohn Author ORCID Identifier

https://orcid.org/0000-0002-3156-0268

Publication Date

3-9-2023

Series

Upjohn Institute working paper ; 23-381

DOI

10.17848/wp23-381

Abstract

The Child and Dependent Care Credit (CDCC) allows households to receive tax credits for certain expenses associated with the care of a spouse or adult dependent who is incapable of self care, but very few childless households claim the credit. We examine the value of the CDCC for qualifying households caring for adults. We find that, as of 2016, more than 10 percent of individuals aged 50 to 65 had a coresident spouse or parent likely to be a qualifying individual for the CDCC. We document how state and federal CDCC benefits decrease post-tax costs of typical caregiving services, such as hiring a home health aide, across states. We find that a temporary expansion during 2021 led to substantial decreases in post-tax care costs but generated considerable differences in benefits across households with spouse and nonspouse qualifying individuals. We discuss expected effects on taxpayers’ behavior of permanently expanding the CDCC and find that making the credit refundable would nearly double the number of eligible spousal caregivers aged 50 to 65, with eligibility rates increasing substantially among female, nonwhite, and low-income caregivers.

Issue Date

March 2023

Note

Upjohn project #69115

Subject Areas

Childcare; LABOR MARKET ISSUES; Wages, health insurance and other benefits; Nonwage benefits; Work and family balance