If you paid someone to care for your child or other qualifying person so you (and your spouse if filing jointly) could work or look for work in 2008, you may be able to take the credit for child and dependent care expenses. You (and your spouse if filing jointly) must have earned income to take the credit. (But see the instructions for line 5 if your spouse was a full-time student or disabled.) If you can take the credit, use Schedule 2 to figure the amount of your credit.

If you (or your spouse if filing jointly) received any dependent care benefits for 2008, you must use Schedule 2 to figure the amount, if any, of the benefits you may exclude from your income on Form 1040A, line 7. You must complete Part III of Schedule 2 before you can figure the credit, if any, in Part II.

See Pub. 503 for more details.

Dependent care benefits include:

• Amounts your employer paid directly to either you or your care provider for the care of your qualifying person(s) while you worked,
• The fair market value of care in a daycare facility provided or sponsored by your employer, and
• Pre-tax contributions you made under a dependent care flexible spending arrangement (FSA).

Your salary may have been reduced to pay for these benefits. If you received dependent care benefits as an employee, they should be shown in box 10 of your 2008 Form(s) W-2.

A qualifying person is:

• A qualifying child under age 13 whom you can claim as a dependent. If the child turned 13 during the year, the child is a qualifying person for the part of the year he or she was under age 13.
• Your disabled spouse who is not physically or mentally able to care for himself or herself.
• Any disabled person who is not physically or mentally able to care for himself or herself whom you can claim as a dependent (or could claim as a dependent except that the person had gross income of $3,500 or more or filed a joint return.)
• Any disabled person who is not physically or mentally able to care for himself or herself whom you could claim as a dependent except that you (or your spouse if filing jointly), could be claimed as a dependent on another taxpayer's 2008 return.

If you are divorced or separated, see Special rule for children of divorced or separated parents on this page.

To find out who is a qualifying child and who is a dependent, see Pub. 501, Exemptions, Standard Deduction, and Filing Information.

Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if:

• The child was under age 13 or was physically or mentally not able to care for himself or herself, and
• You were the child's custodial parent (the parent with whom the child lived for the greater part of 2008).

The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents.

These include amounts paid for household services and care of the qualifying person while you worked or looked for work. Child support payments are not qualified expenses. Also, expenses reimbursed by a state social service agency are not qualified expenses unless you included the reimbursement in your income.

Generally, if you worked or actively looked for work during only a part of the period in which you incurred the expenses, you must figure your expenses for each day. However, there are special rules for temporary absences or part-time work. See Pub. 503 for details.

These are services needed to care for the qualifying person as well as to run the home. They include, for example, the services of a cook, maid, babysitter, housekeeper, or cleaning person if the services were partly for the care of the qualifying person. Do not include services of a chauffeur or gardener.

You can also include your share of the employment taxes paid on wages for qualifying child and dependent care services.

Care includes the cost of services for the qualifying person's well-being and protection. It does not include the cost of clothing or entertainment.

You can include the cost of care provided outside your home for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours a day in your home. If the care was provided by a dependent care center, the center must meet all applicable state and local regulations. A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit.

You can include amounts paid for items other than the care of your child (such as food and schooling) only if the items are incidental to the care of the child and cannot be separated from the total cost. But do not include the cost of schooling for a child in kinder garten or above. You can include the cost of a day camp, even if it specializes in a particular activity, such as soccer. But, do not include any expenses for sending your child to an overnight camp, summer school, or a tutoring program.

Some disabled spouse and dependent care expenses may qualify as medical expenses if you itemize deductions. But you must use Form 1040. However, you cannot claim the same expense as both a dependent care expense and a medical expense. See Pub. 502 and Pub. 503 for details.