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

Gabrielle Pepin and Yulya Truskinovsky
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Yulya Truskinovsky: Wayne State University

No 23-381, Upjohn Working Papers from W.E. Upjohn Institute for Employment Research

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.

Keywords: Adult care; Child and Dependent Care Credit; American Rescue Plan Act of 2021; participation; eligibility (search for similar items in EconPapers)
JEL-codes: H24 J14 (search for similar items in EconPapers)
Date: 2023-03
New Economics Papers: this item is included in nep-age and nep-hea
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Working Paper: Not Just for Kids: Child and Dependent Care Credit Benefits for Adult Care (2024)
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