1. Credit for Child and Dependent Care Expenses

2. 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

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

4. 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

5. 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

6. 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

7. 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

8. 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)

9. 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

10. 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