What type of credit does the child and dependent care credit provide?

The child and dependent care credit is designed to provide financial relief for taxpayers who incur expenses related to the care of children under the age of 13 or for a dependent of any age who is unable to care for themselves. The credit helps offset costs incurred for daycare services, allowing parents or guardians to work or seek employment while having peace of mind about their dependents' care.

This credit is classified as a nonrefundable credit, meaning that while it can reduce the amount of tax owed, it cannot result in a tax refund beyond what you have paid in taxes. This distinguishes it from refundable credits, which could allow for a refund even if the credit exceeds the tax liability.

The other options presented do not accurately reflect the nature of the child and dependent care credit. There is no refundable credit linked to universal healthcare in this context, nor is the credit a deduction for education-related expenses or an exemption related to dependent children under 18. Understanding this type of credit is crucial for taxpayers looking to maximize their tax benefits related to dependent care expenses.