Child Care Credit/Other Credits > Child and Dependent Care Credit & Flexible Benefit Plans

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Frequently Asked Tax Questions

Child Care Credit/Other Credits - Child and Dependent Care Credit & Flexible Benefit Plans

Rev. date: 1/2009

My spouse and I both work and are eligible for the child and dependent care credit. Can I include the cost of my 5 year-old-son's private kindergarten tuition cost as a qualified expense on Form 2441, Child and Dependent Care Expenses?

Child Care Credit
Child Care Expenses
Child and Dependent Care Credit
Child and Dependent Care Expenses
Dependent Care
Dependent Care Expenses
Form 2441

The expense for kindergarten does not qualify for the child and dependent care credit because kindergarten is primarily educational in nature.

The part of the expense of sending your child to school that is for your child's care may qualify for the credit, if it can be separated from the expense of education.
For example, the cost of an after school care program may qualify, even though the school tuition does not qualify.

Rev. date: 1/2009

Do daycare payments for an elderly person qualify for the child and dependent care credit?

Child and Dependent
Child and Dependent Care Credit
Child and Dependent Care Expenses
Daycare
Dependent Care
Dependent Care Expenses

Daycare payments for an elderly person may qualify as dependent care expenses if the person receiving the care is your spouse or dependent who lives with you and is incapable of self-care.

Rev. date: 1/2009

I am thinking of having a family member babysit for my child full time in her home while I work. Who is responsible for paying taxes on the money I pay for this care? Can I claim this cost as a child care expense even though my family member is not a registered day care provider?

Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby
Child Care
Child Care Credit
Child and Dependent Care Expenses
Dependent Care Expenses
Household Employer's Tax Guide
Household Employment Taxes
Housekeepers, maids, or servants.

These payments may be qualified child care expenses if the family member babysitting is not your dependent or your child under age 19 and you otherwise qualify to claim the child and dependent care credit.

Who is responsible for taxes on these payments depends on whether your family member is your employee or is self-employed (an independent contractor).

See Publication 15-A (PDF), Employer's Supplemental Tax Guide, for a discussion of how to tell whether an individual who is performing services for you is an employee or an independent contractor.
If your family member is not your employee, then the family member will be responsible for paying income taxes and self-employment taxes on the income earned.
If your family member is your employee, then you are generally responsible for withholding and paying the taxes.
Special rules apply to family employees. See Publication 15 , Circular E, Employer's Tax Guide, for these rules.

Rev. date: 1/2009

Why did I receive a Form W-2 reporting a benefit of $3,000 in Box 10 when my employer set aside $3,000 in wages for dependent care under a dependent care benefit plan?

Child Care Credit
Child and Dependent Care Expenses
Dependent Care
Dependent Care Expenses
Employee Benefits
Employer Provided Dependent Care Benefits
Flexible spending arrangement
Taxable Income
Taxable and Nontaxable Income

This type of plan is an agreement to voluntarily reduce your salary in return for an employer-provided fringe benefit.

These plans give you a choice of whether to receive cash wages or a benefit for dependent care.
You are receiving a tax benefit because you are not paying taxes on the money that is set aside to pay for the dependent care.

Rev. date: 1/2009

My babysitter refused to provide me with her social security number. Can I still claim the amount I paid to the babysitter for child care while I worked? If so, how do I claim these child care expenses on my tax return?

Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby
Child Care
Child Care Credit
Child Care Expenses
Child and Dependent
Child and Dependent Care Expenses
Dependent Care Expenses
Social Security Number

Yes, if you meet the other requirements to claim the child and dependent care credit, but are missing the social security number or other taxpayer identification number of a provider, you can still claim the credit by demonstrating "due diligence" in attempting to secure this information.

If a provider of child care refuses to give the identifying information, the taxpayer can still claim the credit.
The taxpayer must provide whatever information is available about the provider (such as name and address) on Form 2441 (PDF), Child and Dependent Care Expenses, or Form 1040A, Schedule 2 (PDF), Child and Dependent Care Expenses for Form 1040A Filers.
Write "see page 2" in the columns requesting the missing information.
Write at the bottom of page 2 that the provider refused to give the requested information.
This statement will show that the taxpayer used due diligence in trying to secure and furnish the identifying information.

Rev. date: 1/2009

How do I complete Form 2441 if I have a flexible spending account?

Child Care Credit
Child and Dependent Care Expenses
Dependent Care Expenses
Employee Benefits
Flexible spending arrangement
Form 2441

You must complete Part III of Form 2441 (PDF), Child and Dependent Care Expenses, (or Form 1040A, Schedule 2 (PDF), Child and Dependent Care Expenses for Form 1040A Filers) to exclude the dependent care benefit from income even if you cannot claim the child and dependent care credit.

Enter your total employer-provided dependent care benefit on the correct line (this amount should appear in Box 10 of your Form W-2) and your qualified expenses on the correct line.
The last lines of Part III will help you determine whether you can also take the credit and the dollar limit on qualified expenses.
Also complete Part I, Persons or Organizations Who Provided the Care.


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