skip navigation

Search Help
Navigation Help


Main Topics
A B C D E F G H I
J K L M N O P Q R
S T U V W X Y Z #


FAQs
Forms
Publications
Tax Topics


Comments
About Tax Map
IRS Tax Map 2008
Current IRS Tax Map

taxmap/pub17/p17-174.htm#en_us_publink1000174458

Example(p226)


rule
spacer

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.
taxmap/pub17/p17-174.htm#en_us_publink1000174460

Illustrated example.(p226)


rule
spacer

Joan Thomas is divorced and has two children, ages 3 and 9. She works at ACME Computers. Her adjusted gross income (AGI) (shown on her Form 1040A, line 22) 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$ 973
9)Enter the amount from Form 1040, line 47 0
10)Subtract line 9 from line 8$ 973
11)Credit (Enter the smaller of line 7 or line 10) $ 672
taxmap/pub17/p17-174.htm#en_us_publink1000174462