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previous page Previous Page: Publication 17 - Your Federal Income Tax - Employment Taxes for Household Employers
next page Next Page: Publication 17 - Your Federal Income Tax - Credit for the Elderly or the Disabled
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pub17/p17-173.htm#en_us_publink100034922

Example(p222)


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The following example shows how to figure the credit for child and dependent care expenses for two children when employer-provided dependent care benefits are involved. The filled-in draft Form 2441 is shown at the end of this chapter.
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Illustrated example.(p222)


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Joan Thomas is divorced and has two children, ages 3 and 9. She works at ACME Computers. Her adjusted gross income (AGI) is $29,000, and the entire amount is earned income.
Joan's younger child (Susan) stays at her employer's on-site childcare center while she works. The benefits from this childcare center qualify to be excluded from her income. Her employer reports the value of this service as $3,000 for the year. This $3,000 is shown on her Form W-2 in box 10, but is not included in taxable wages in box 1.
A neighbor cares for Joan's older child (Seth) after school, on holidays, and during the summer. Joan pays her neighbor $2,400 for this care.
Joan figures her credit on Form 2441 as follows.
1) Work-related expenses Joan paid$2,400
2) Dollar limit (2 or more qualified individuals)$6,000
3) Minus: Dependent care benefits excluded from Joan's income -3,000
4) Reduced dollar limit$3,000
5) Lesser of expenses paid ($2,400) or dollar limit ($3,000)$2,400
6) Percentage for AGI of $29,000 (28%) .28
7) Multiply the amount on line 5 by the percentage on line 6 ($2,400 x .28)$ 672
8) Enter the amount from Form 1040, line 46$1,053
9) Enter the amount from Form 1040, line 47 0
10) Subtract line 9 from line 8$1,053
11) Credit (Enter the smaller of line 7 or line 10)$ 672
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