Publication 17
taxmap/pub17/p17-163.htm#en_us_publink1000174322taxmap/pub17/p17-163.htm#en_us_publink1000174324Taxpayer identification number needed for each qualifying person.(p212)
taxmap/pub17/p17-163.htm#en_us_publink1000174327You may have to pay employment taxes.(p212)
If you pay someone to come to your home and care for your dependent
or spouse, you may be a household employer who has to pay employment taxes.
Usually, you are not a household employer if the person who cares for your
dependent or spouse does so at his or her home or place of business. See
Employment Taxes for Household Employers, later.
This chapter discusses the credit for child and dependent care
expenses and covers the following topics.
- Tests you must meet to claim the credit.
- How to figure the credit.
- How to claim the credit.
- Employment taxes you may have to pay as a household employer.
You may be able to claim the credit if you pay someone to care
for your dependent who is under age 13 or for your spouse or dependent who is
not able to care for himself or herself. The credit can be up to 35% of your
expenses. To qualify, you must pay these expenses so you can work or look for
work.
 | This credit should not be confused with the
child tax credit discussed in chapter 34. |
taxmap/pub17/p17-163.htm#en_us_publink1000174331If you received any dependent care benefits from your employer
during the year, you may be able to exclude from your income all or part of
them. You must complete Part III of Form 2441 before you can figure the amount
of your credit. See
Dependent Care Benefits under
How To Figure the Credit, later.
Useful items
You may want to see:
Publication 501 Exemptions, Standard Deduction, and Filing Information 503 Child and Dependent Care Expenses 926 Household Employer's Tax Guide Form (and Instructions) 2441:
Child and Dependent Care Expenses Schedule H (Form 1040):
Household Employment Taxes W-7:
Application for IRS Individual Taxpayer Identification Number W-10:
Dependent Care Provider's Identification and Certification taxmap/pub17/p17-163.htm#en_us_publink1000174334To be able to claim the credit for child and dependent care expenses,
you must file Form 1040 or Form 1040A, not Form 1040EZ, and meet all the
following tests.
- The care must be for one or more qualifying persons who are
identified on the form you use to claim the credit. (See
Qualifying Person Test.)
- You (and your spouse if filing jointly) must have earned income
during the year. (However, see
Rule for student-spouse or spouse not able to care for self under
Earned Income Test, later.)
- You must pay child and dependent care expenses so you (and
your spouse if filing jointly) can work or look for work. (See
Work-Related Expense Test, later.)
- You must make payments for child and dependent care to someone
you (and your spouse) cannot claim as a dependent. If you make payments to your
child, he or she cannot be your dependent and must be age 19 or older by the end
of the year. You cannot make payments to:
- Your spouse, or
- The parent of your qualifying person if your qualifying
person is your child and under age 13.
(See
Payments to Relatives or Dependents under
Work-Related Expense Test, later.)
- Your filing status must be single, head of household, qualifying
widow(er) with dependent child, or married filing jointly. You must file a joint
return if you are married, unless an exception applies to you. (See
Joint Return Test, later.)
- You must identify the care provider on your tax return. (See
Provider Identification Test, later.)
- If you exclude or deduct dependent care benefits provided
by a dependent care benefits plan, the total amount you exclude or deduct must
be less than the dollar limit for qualifying expenses (generally, $3,000 if one
qualifying person was cared for or $6,000 if two or more qualifying persons were
cared for). (If two or more qualifying persons were cared for, the amount you
exclude or deduct will always be less than the dollar limit, since the amount
you can exclude or deduct is limited to $5,000. See
Reduced Dollar Limit under
How To Figure the Credit, later.)
These tests are presented in Figure 32-A and are also explained
in detail in this chapter.
Your child and dependent care expenses must be for the care of
one or more qualifying persons.
A qualifying person is:
- Your qualifying child who is your dependent and who was under
age 13 when the care was provided (but see
Note later),
- Your spouse who was not physically or mentally able to care
for himself or herself and lived with you for more than half the year, or
- A person who was not physically or mentally able to care for
himself or herself, lived with you for more than half the year, and either:
- Was your dependent, or
- Would have been your dependent except that:
- He or she received gross income of $3,650 or more,
- He or she filed a joint return, or
- You, or your spouse if filing jointly, could be claimed
as a dependent on someone else's 2010 return.
A dependent is a person, other than you or your spouse, for whom
you can claim an exemption. To be your dependent, a person must be your
qualifying child (or your qualifying relative).
taxmap/pub17/p17-163.htm#en_us_publink1000174351To be your qualifying child, a child must live with you for more
than half the year and meet other requirements.
taxmap/pub17/p17-163.htm#en_us_publink1000174352For more information about who is a dependent or a qualifying
child, see
chapter 3.
Persons who cannot dress, clean, or feed themselves because of
physical or mental problems are considered not able to care for themselves.
Also, persons who must have constant attention to prevent them from injuring
themselves or others are considered not able to care for themselves.
taxmap/pub17/p17-163.htm#en_us_publink1000174355You determine a person's qualifying status each day. For example,
if the person for whom you pay child and dependent care expenses no longer
qualifies on September 16, count only those expenses through September 15. Also
see
Yearly Limit under
Dollar Limit, later.
In determining whether a person is a qualifying person, a person
who was born or died in 2010 is treated as having lived with you for all of 2010
if your home was the person's home the entire time he or she was alive in 2010.
taxmap/pub17/p17-163.htm#en_us_publink1000174359You must include on your return the name and taxpayer identification
number (generally the social security number) of the qualifying person(s). If
the correct information is not shown, the credit may be reduced or disallowed.
taxmap/pub17/p17-163.htm#en_us_publink1000174360If your qualifying person is a nonresident or resident alien
who does not have and cannot get a social security number (SSN), use that
person's ITIN. The ITIN is entered wherever an SSN is requested on a tax return.
To apply for an ITIN, see Form W-7.
An ITIN is for tax use only. It does not entitle the holder to
social security benefits or change the holder's employment or immigration status
under U.S. law.
taxmap/pub17/p17-163.htm#en_us_publink1000174361If your qualifying person is a child who was placed in your home
for adoption and for whom you do not have an SSN, you must get an ATIN for the
child. File Form W-7A, Application for Taxpayer Identification Number for
Pending U.S. Adoptions.
taxmap/pub17/p17-163.htm#en_us_publink1000174362Even 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 not physically or mentally
able to care for himself or herself,
- The child received over half of his or her support during
the calendar year from one or both parents who are divorced or legally separated
under a decree of divorce or separate maintenance, are separated under a written
separation agreement, or lived apart at all times during the last 6 months of
the calendar year,
- The child was in the custody of one or both parents for more
than half the year, and
- You were the child's custodial parent (the parent with whom
the child lived for the greater part of 2010).
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.
taxmap/pub17/p17-163.htm#en_us_publink1000174363To claim the credit, you (and your spouse if filing jointly)
must have earned income during the year.
taxmap/pub17/p17-163.htm#en_us_publink1000174364Earned income includes wages, salaries, tips, other taxable employee
compensation, and net earnings from self-employment. A net loss from
self-employment reduces earned income. Earned income also includes strike
benefits and any disability pay you report as wages.
Generally, only taxable compensation is included. However, you
can elect to include nontaxable combat pay in earned income. If you are filing a
joint return and both you and your spouse received nontaxable combat pay, you
can each make your own election. You should figure your credit both ways and
make the election if it gives you a greater tax benefit.
taxmap/pub17/p17-163.htm#en_us_publink1000174365Certain income earned by persons who are members of certain religious
faiths that are opposed to participation in Social Security Act programs and
have an IRS-approved form that exempts certain income from social security and
Medicare taxes may not be considered earned income for this purpose. See
Earned Income Test
in Publication 503.
taxmap/pub17/p17-163.htm#en_us_publink1000174366Earned income does not include:
- Pensions and annuities,
- Social security and railroad retirement benefits,
- Workers' compensation,
- Interest and dividends,
- Unemployment compensation,
- Scholarship or fellowship grants, except for those reported
on a Form W-2 and paid to you for teaching or other services,
- Nontaxable workfare payments,
- Child support payments received by you,
- Income of nonresident aliens that is not effectively connected
with a U.S. trade or business, or
- Any amount received for work while an inmate in a penal institution.
Your spouse is treated as having earned income for any month
that he or she is:
- A full-time student, or
- Physically or mentally not able to care for himself or herself.
(Your spouse also must live with you for more than half the year.)
Figure the earned income of the nonworking spouse described under
(1) or (2) above as explained under
Earned Income Limit, later.
This rule applies to only one spouse for any one month. If, in
the same month, both you and your spouse do not work and are either full-time
students or not physically or mentally able to care for yourselves, only one of
you can be treated as having earned income in that month.
taxmap/pub17/p17-163.htm#en_us_publink1000174369You are a full-time student if you are enrolled at a school for
the number of hours or classes that the school considers full time. You must
have been a full-time student for some part of each of 5 calendar months during
the year. (The months need not be consecutive.)
taxmap/pub17/p17-163.htm#en_us_publink1000174370The term "school" includes high schools, colleges, universities,
and technical, trade, and mechanical schools. A school does not include an
on-the-job training course, correspondence school, or school offering courses
only through the Internet.
taxmap/pub17/p17-163.htm#en_us_publink1000174372Child and dependent care expenses must be work-related to qualify
for the credit. Expenses are considered work-related only if both of the
following are true.
- They allow you (and your spouse if filing jointly) to work
or look for work.
- They are for a qualifying person's care.
To be work-related, your expenses must allow you to work or look
for work. If you are married, generally both you and your spouse must work or
look for work. Your spouse is treated as working during any month he or she is a
full-time student or is not physically or mentally able to care for himself or
herself.
Your work can be for others or in your own business or partnership.
It can be either full time or part time.
Work also includes actively looking for work. However, if you
do not find a job and have no earned income for the year, you cannot take this
credit. See
Earned Income Test, earlier.
An expense is not considered work-related merely because you
had it while you were working. The purpose of the expense must be to allow you
to work. Whether your expenses allow you to work or look for work depends on the
facts.
taxmap/pub17/p17-163.htm#en_us_publink1000174375The cost of a babysitter while you and your spouse go out to
eat is not normally a work-related expense.
taxmap/pub17/p17-163.htm#en_us_publink1000174376You work during the day. Your spouse works at night and sleeps
during the day. You pay for care of your 5-year-old child during the hours when
you are working and your spouse is sleeping. Your expenses are considered
work-related.
taxmap/pub17/p17-163.htm#en_us_publink1000174377
For this purpose, you are not considered to be working if you do unpaid
volunteer work or volunteer work for a nominal salary.
taxmap/pub17/p17-163.htm#en_us_publink1000174378If you work or actively look for work during only part of the
period covered by the expenses, then you must figure your expenses for each day.
For example, if you work all year and pay care expenses of $250 a month ($3,000
for the year), all the expenses are work-related. However, if you work or look
for work for only 2 months and 15 days during the year and pay expenses of $250
a month, your work-related expenses are limited to $625 (21/2 months × $250).
taxmap/pub17/p17-163.htm#en_us_publink1000174379You do not have to figure your expenses for each day during a
short, temporary absence from work, such as for vacation or a minor illness, if
you have to pay for care anyway. Instead, you can figure your credit including
the expenses you paid for the period of absence.
An absence of 2 weeks or less is a short, temporary absence.
An absence of more than 2 weeks may be considered a short, temporary absence,
depending on the circumstances.
taxmap/pub17/p17-163.htm#en_us_publink1000174380You pay a nanny to care for your 2-year-old son and 4-year-old
daughter so you can work. You become ill and miss 4 months of work but receive
sick pay. You continue to pay the nanny to care for the children while you are
ill. Your absence is not a short, temporary absence, and your expenses are not
considered work-related.
taxmap/pub17/p17-163.htm#en_us_publink1000174381If you work part-time, you generally must figure your expenses
for each day. However, if you have to pay for care weekly, monthly, or in
another way that includes both days worked and days not worked, you can figure
your credit including the expenses you paid for days you did not work. Any day
when you work at least 1 hour is a day of work.
taxmap/pub17/p17-163.htm#en_us_publink1000174382You work 3 days a week. While you work, your 6-year-old child
attends a dependent care center, which complies with all state and local
regulations. You can pay the center $150 for any 3 days a week or $250 for 5
days a week. Your child attends the center 5 days a week. Your work-related
expenses are limited to $150 a week.
taxmap/pub17/p17-163.htm#en_us_publink1000174383The facts are the same as in
Example 1
except the center does not offer a 3-day option. The entire $250 weekly fee may
be a work-related expense.
taxmap/pub17/p17-163.htm#en_us_publink1000174384To be work-related, your expenses must be to provide care for
a qualifying person.
You do not have to choose the least expensive way of providing
care. The cost of a paid care provider may be an expense for the care of a
qualifying person even if another care provider is available at no cost.
Expenses are for the care of a qualifying person only if their
main purpose is the person's well-being and protection.
Expenses for household services qualify if part of the services
is for the care of qualifying persons. See
Household services, later.
Expenses for care do not include amounts you pay for food, lodging,
clothing, education, and entertainment. However, you can include small amounts
paid for these items if they are incident to and cannot be separated from the
cost of caring for the qualifying person.
taxmap/pub17/p17-163.htm#en_us_publink1000174387Expenses for a child in nursery school, pre-school, or similar
programs for children below the level of kindergarten are expenses for care.
Expenses to attend kindergarten or a higher grade are not expenses for care. Do
not use these expenses to figure your credit.
However, expenses for before- or after-
school care of a child in kindergarten or a higher grade may
be expenses for care.
Summer school and tutoring programs are not for care.
taxmap/pub17/p17-163.htm#en_us_publink1000174388You take your 3-year-old child to a nursery school that provides
lunch and educational activities as a part of its preschool childcare service.
The lunch and educational activities are incident to the childcare, and their
cost cannot be separated from the cost of care. You can count the total cost
when you figure the credit.
taxmap/pub17/p17-163.htm#en_us_publink1000174389You place your 10-year-old child in a boarding school so you
can work full time. Only the part of the boarding school expense that is for the
care of your child is a work-related expense. You can count that part of the
expense in figuring your credit if it can be separated from the cost of
education. You cannot count any part of the amount you pay the school for your
child's education.
taxmap/pub17/p17-163.htm#en_us_publink1000174390You can count the cost of care provided outside your home if
the care is for your dependent under age 13 or any other qualifying person who
regularly spends at least 8 hours each day in your home.
taxmap/pub17/p17-163.htm#en_us_publink1000174391You can count care provided outside your home by a dependent
care center only if the center complies with all state and local regulations
that apply to these centers.
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.
taxmap/pub17/p17-163.htm#en_us_publink1000174392The cost of sending your child to an overnight camp is not considered
a work-related expense. The cost of sending your child to a day camp may be a
work-related expense, even if the camp specializes in a particular activity,
such as computers or soccer.
taxmap/pub17/p17-163.htm#en_us_publink1000174393If a care provider takes a qualifying person to or from a place
where care is provided, that transportation is for the care of the qualifying
person. This includes transportation by bus, subway, taxi, or private car.
However, transportation not provided by a care provider is not for the care of a
qualifying person. Also, if you pay the transportation cost for the care
provider to come to your home, that expense is not for care of a qualifying
person.
taxmap/pub17/p17-163.htm#en_us_publink1000174394Fees you paid to an agency to get the services of a care provider,
deposits you paid to an agency or pre-school, application fees, and other
indirect expenses are work-related expenses if you have to pay them to get care,
even though they are not directly for care. However, a forfeited deposit is not
for the care of a qualifying person if care is not provided.
taxmap/pub17/p17-163.htm#en_us_publink1000174395You paid a fee to an agency to get the services of the nanny
who cares for your 2-year-old daughter while you work. The fee you paid is a
work-related expense.
taxmap/pub17/p17-163.htm#en_us_publink1000174396You placed a deposit with a pre-school to reserve a place for
your 3-year-old child. You later sent your child to a different pre-school and
forfeited the deposit. The forfeited deposit is not for care and so is not a
work-related expense.
taxmap/pub17/p17-163.htm#en_us_publink1000174397Expenses you pay for household services meet the work-related
expense test if they are at least partly for the well-being and protection of a
qualifying person.
Household services are ordinary and usual services done in and
around your home that are necessary to run your home. They include the services
of a housekeeper, maid, or cook. However, they do not include the services of a
chauffeur, bartender, or gardener. See
Household Services
in Publication 503 for more information.
In this chapter, the term housekeeper refers to any household
employee whose services include the care of a qualifying person.
taxmap/pub17/p17-163.htm#en_us_publink1000174398taxmap/pub17/p17-163.htm#en_us_publink1000174400You can count work-related payments you make to relatives who
are not your dependents, even if they live in your home. However, do not count
any amounts you pay to:
- A dependent for whom you (or your spouse if filing jointly)
can claim an exemption,
- Your child who was under age 19 at the end of the year, even
if he or she is not your dependent,
- A person who was your spouse any time during the year, or
- The parent of your qualifying person if your qualifying person
is your child and under age 13.
Generally, married couples must file a joint return to take the
credit. However, if you are legally separated or living apart from your spouse,
you may be able to file as Head of Household and still take the credit. However,
you cannot use the filing status — Married Filing Separately, if you plan
to claim the credit.
taxmap/pub17/p17-163.htm#en_us_publink1000174402You are not considered married if you are legally separated from
your spouse under a decree of divorce or separate maintenance. You may be
eligible to take the credit on your return using Head of Household filing
status.
taxmap/pub17/p17-163.htm#en_us_publink1000174403You are not considered married and are eligible to take the credit
if all the following apply.
- You file a return apart from your spouse.
- Your home is the home of a qualifying person for more than
half the year.
- You pay more than half the cost of keeping up your home for
the year.
- Your spouse does not live in your home for the last 6 months
of the year.
The costs of keeping up a home normally include property taxes,
mortgage interest, rent, utility charges, home repairs, insurance on the home,
and food eaten at home.
The costs of keeping up a home do not include payments for clothing,
education, medical treatment, vacations, life insurance, transportation, or
mortgage principal.
They also do not include the purchase, permanent improvement,
or replacement of property. For example, you cannot include the cost of
replacing a water heater. However, you can include the cost of repairing a water
heater.
taxmap/pub17/p17-163.htm#en_us_publink1000174405If your spouse died during the year and you do not remarry before
the end of the year, you generally must file a joint return to take the credit.
If you do remarry before the end of the year, the credit can be claimed on your
deceased spouse's own return.
taxmap/pub17/p17-163.htm#en_us_publink1000174406You must identify all persons or organizations that provide care
for your child or dependent. Use Part I of Form 2441 to show the information.
Note.If you did not have a qualifying person and any care providers
for 2010, and you are filing Form 2441 only to report taxable income in Part
III, enter "none" in line 1, column (a).
taxmap/pub17/p17-163.htm#en_us_publink1000174407To identify the care provider, you must give the provider's:
- Name,
- Address, and
- Taxpayer identification number.
If the care provider is an individual, the taxpayer identification
number is his or her social security number or individual taxpayer
identification number. If the care provider is an organization, then it is the
employer identification number (EIN).
You do not have to show the taxpayer identification number if
the care provider is a tax-exempt organization (such as a church or school). In
this case, enter "Tax-Exempt" in the space where the tax form calls for the
number.
If you cannot provide all of the information or if the information
is incorrect you must be able to show that you used due diligence (discussed
later) in trying to furnish the necessary information.
taxmap/pub17/p17-163.htm#en_us_publink1000174408You can use Form W-10 to request the required information from
the care provider. If you do not use Form W-10, you can get the information from
one of the other sources listed in the instructions for Form W-10 including:
- A copy of the provider's social security card,
- A copy of the provider's completed Form W-4 if he or she is
your household employee,
- A copy of the statement furnished by your employer if the
provider is your employer's dependent care plan, or
- A letter or invoice from the provider if it shows the information.
 | You should keep this information with your tax records. Do
not send Form W-10 (or other document containing this information) to the
Internal Revenue Service.
|
taxmap/pub17/p17-163.htm#en_us_publink1000174410If the care provider information you give is incorrect or incomplete,
your credit may not be allowed. However, if you can show that you used due
diligence in trying to supply the information, you can still claim the credit.
You can show due diligence by getting and keeping the provider's
completed Form W-10 or one of the other sources of information listed earlier.
Care providers can be penalized if they do not provide this information to you
or if they provide incorrect information.
taxmap/pub17/p17-163.htm#en_us_publink1000174411If the provider refuses to give you their identifying information,
you should report whatever information you have (such as the name and address)
on the form you use to claim the credit. Enter "See Attached Statement" in the
columns calling for the information you do not have. Then attach a statement
explaining that you requested the information from the care provider, but the
provider did not give you the information. Be sure to write your name and social
security number on this statement. The statement will show that you used due
diligence in trying to furnish the necessary information.
taxmap/pub17/p17-163.htm#en_us_publink1000174412If you are living abroad, your care provider may not have, and
may not be required to get, a U.S. taxpayer identification number (for example,
an SSN or EIN). If so, enter "LAFCP" (Living Abroad Foreign Care Provider) in
the space for the care provider's taxpayer identification number.
Previous Page |
Table of Contents |
Index |
Next Page
