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taxmap/pubs/p503-005.htm#en_us_publink1000203391

Examples(p15)


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The following examples show how to figure the credit for child and dependent care expenses. Filled-in Form 2441 (filed with Forms 1040A and 1040) that illustrates Examples 1 and 2 are shown after the examples.
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Form 221 Child and Dependent Care Expenses Text DescriptionForm 221 Child and Dependent Care Expenses  
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Page 1 of Form 2441 for Joan Thomas Text DescriptionPage 1 of Form 2441 for Joan Thomas  
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Page 2 of Form 2441 for Joan Thomas Text DescriptionPage 2 of Form 2441 for Joan Thomas  
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Example 1. 
Childcare — Two Children(p15)


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Jerry and Ann Jones are married and keep up a home for their two preschool children, ages 2 and 4. They claim their children as dependents and file a joint return using Form 1040A. Their adjusted gross income (AGI) is $27,500. Jerry earned $12,500 and Ann earned $15,000.
During the year, they pay work-related expenses of $3,000 for childcare for their son Daniel at a neighbor's home and $3,200 for childcare for their daughter Amy at Pine Street Nursery School.
They figure their credit on Form 2441 as follows.
1) Childcare provided by their neighbor$ 3,000
2) Childcare provided by the nursery school   +3,200
3) Total work-related expenses$ 6,200
4) Dollar limit$  6,000
5) Lesser of expenses paid ($6,200) or dollar limit
($6,000)
$ 6,000
6) Percentage for AGI of $27,500 (28%)   .28
7) Multiply the amount on line 5 by the percentage on line 6 ($6,000 x .28)$ 1,680
8) Enter the amount from line 28 of Form 1040A$  151
9) Credit (Enter the smaller of line 7 or line 8)$  151
The amount of credit they can claim is limited to their tax, $151.
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Example 2. 
Dependent Care Benefits(p15)


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Joan Thomas is divorced and has two dependent 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. She 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