Overview

• The Internal Revenue Code allows you to claim the Child and Dependent Care Credit if you incurred expenses to provide care for your children or your spouse. If your granddaughter lived with you for more than half the tax year, you can receive a tax credit equal to 35 percent of your dependent care expenses, limited to $3,000 for each child or dependent and $6,000 for two or more dependents.
  
  

Amount of Tax Credit

• If you have one grandchild who lives with you, you can claim a credit of up to $3,000 per year. Although childcare expenses are limited to care provided to children under 13, the IRS does not limit the age for dependent care expenses provided to disabled children 13 and older and adults. If you are married, you and your husband must both work or look for work. If you are retired, you may only be able to claim a medical expense deduction. Furthermore, you and your spouse must file taxes jointly.
  
  

Qualifying Child

• You can receive a tax credit dependent care expenses that you incurred to provide care for your disabled granddaughter of any age. The IRS allows you to receive a tax credit for a qualifying child or relative. Qualifying relatives include children, grandchildren, siblings, stepsiblings or descendants of your siblings if you can claim them as dependents. You must be able to claim your qualifying grandchild as a dependent. If you can claim your grandchild as an exemption on your tax returns, and your grandchild lived with you for over six months, you can claim her dependent care expenses.
  
  

Definition of Disabled Qualifying Relative

• If your grandchild is 13 or older, you can claim your grandchild as a dependent if your grandchild was unable to mentally or physically care for herself. A qualifying disability is one that precludes your granddaughter from dressing herself, cleaning herself or feeding herself. If you needed care to prevent your granddaughter from injuring herself or others, your granddaughter has a qualified disability.
  
  

Definition of Qualified Care

• You can receive a credit on your in-home care providers or out-of-home providers you paid to help your grandchild. Your in-home care must have been for the care of your grandchild. As such, a housekeeper or care provider who cooked, cleaned or dressed your granddaughter is a qualified care provider. You must identify your care provider and your grandchild on your IRS Form 2441, Child and Dependent Care Expenses.
  
  

Other Tax Benefits

• If you do not work or are not looking for work, you may not be able to claim the tax credit. Instead, you may deduct your qualified medical expenses. You can deduct your qualified medical expenses and costs of medical supplies if your granddaughter's expenses exceeded 7.5 percent of your annual adjusted gross income. The portion exceeding the 7.5 percent threshold is deductible on your Schedule A of Form 1040, and only if you itemize your taxes.