Credit for Child and Dependent Care Expenses

Description The credit may be claimed by taxpayers who, in order to work or look for work, pay someone to care for their qualifying: Dependent child under age of 13 Spouse who is unable to care for him/herself Dependents who are unable to care for themselves Range from 20%-35% of expenses

Determining Eligibility Qualifying person test Earned income test Work-related expense test Joint return test Provider identification test Decision Tree (G-2 of Handbook)

Earned Income Taxpayer must have earned income Wages, salaries, tips A taxpayer’s spouse is considered to have earned income for any month he or she is: Full-time student Physically or mentally unable to care for him/herself

Work-Related Expense Test Did you pay the expenses to allow you to work or look for work? Work-Related Expense Limit $3,000 for expenses paid for one qualifying person $6,000 for two or more qualifying persons

Work-Related Expense Cost of care outside the home for dependents under age of 13; Preschool Cost of care for any other qualifying person; Dependant care Household expense that are at least partly for the well-being and protection of a qualifying person; housekeeper, cook

Expenses that do NOT qualify Education (kindergarten or higher ed.) The cost of sending a child to an overnight camp Cost of transportation not provided by care provider

Provider Identification Test Requires that the taxpayer provide the name, address, and taxpayer identification number (TIN) of the person or organization that provided care Individual: Social Security Number (SSN) Organization: Employer ID Number (EIN)

Figuring the Credit Use Form 2441 Part 1 is for general information about the care provider Part 2 is where the credit for child and dependent care expenses is calculated Part 3 is where employer-provided dependent care benefits are reported Must complete Part 3 if you received dependent care benefits

Limits to the Credit Amount of work-related expenses used to figure the credit cannot be more than Taxpayer’s earned income for the year, or The smaller of the taxpayer’s or spouse’s earned income for the year, if married filing jointly Limit $3,000 for one qualifying person Limit $6,000 for two or more qualifying persons