What is the difference between child care credit, child tax credit, and child deduction?

What is the difference between child care credit, child tax credit, and child deduction?

Child care credit is more commonly referred to as the "dependent care credit." This is designed to keep people working even if they have a child at home. A taxpayer who maintains a household that includes one or more qualifying children may claim a nonrefundable credit against income. This credit is limited in 2007 to 35% of the costs incurred for child care (while you're at work) up to a maximum of $3,000 for one child and $6,000 if there are two or more. The credit is reduced (but not below 20%) by 1% for each $2,000 of adjusted gross income above $15,000. So, if you earn $17,000, your credit will be 34%.

Child tax credit allows you to claim a tax credit of $600 for each qualifying child under the age of 17 at the end of 2002.