Yes, daycare payments for an elderly person can qualify for the child and dependent care credit under certain conditions.
To qualify for the child and dependent care credit, the expenses must be for the care of a "qualifying individual." According to the Internal Revenue Code § 21(b)(1), a qualifying individual includes:
Additionally, the expenses must be "employment-related," meaning they must be incurred to enable the taxpayer to be gainfully employed. This includes expenses for household services and the care of a qualifying individual (§ 21(b)(2)(A)).
The care must be provided so that the taxpayer (and their spouse, if filing jointly) can work or look for work. If the care is provided outside the taxpayer's household, additional requirements apply, such as the care being provided by a dependent care center that complies with state and local laws (§ 21(b)(2)(C)).
Furthermore, the taxpayer must provide the name, address, and taxpayer identification number of the care provider on their tax return (§ 21(e)(9)).
Therefore, if the elderly person is a dependent or spouse who is physically or mentally incapable of self-care, lives with the taxpayer for more than half the year, and the care expenses are incurred to enable the taxpayer to work or look for work, then daycare payments for the elderly person can qualify for the child and dependent care credit.
Sources:
IRS Fact Sheet Updates FAQs on Child Tax Credit
Publication 554 (2022)
CCA 200812024
Publication 503 (2023)
§ 21. Expenses for household and dependent care services necessary for gainful employment
