Publication 503 - Child and Dependent Care Expenses

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.

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.

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 1040, line 38) 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

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Worksheet A. Worksheet for 2009 Expenses Paid in 2010

Use this worksheet to figure the credit you may claim for 2009 expenses paid in 2010.

1.	Enter your 2009 qualified expenses paid in 2009						1.
2.	Enter your 2009 qualified expenses paid in 2010						2.
3.	Add the amounts on lines 1 and 2						3.
4.	Enter $3,000 if care was for one qualifying person ($6,000 if for two or more)						4.
5.	Enter any dependent care benefits received for 2009 and excluded from your income (from your 2009 Form 2441, line 28).						5.
6.	Subtract the amount on line 5 from the amount on line 4 and enter the result						6.
7.	Compare your earned income for 2009 and your spouse's earned income for 2009 and enter the smaller amount						7.
8.	Compare the amounts on lines 3, 6, and 7 and enter the smallest amount						8.
9.	Enter the amount on which you figured the credit for 2009 (from line 6 of your 2009 Form 2441).						9.
10.	Subtract the amount on line 9 from the amount on line 8 and enter the result. If zero or less, stop here. You cannot increase your credit by any previous year's expenses						10.
11.	Enter your 2009 adjusted gross income (from your 2009 Form 1040, line 38, Form 1040A, line 22, or Form 1040NR, line 36).						11.
12.	Find your 2009 adjusted gross income in the table below and enter the corresponding decimal amount here						12.

		IF your 2009 adjusted gross income is:				THEN the decimal
			Over:		But not over:	amount is:
			$ 0	—	$15,000	.35
			15,000	—	17,000	.34
			17,000	—	19,000	.33
			19,000	—	21,000	.32
			21,000	—	23,000	.31
			23,000	—	25,000	.30
			25,000	—	27,000	.29
			27,000	—	29,000	.28
			29,000	—	31,000	.27
			31,000	—	33,000	.26
			33,000	—	35,000	.25
			35,000	—	37,000	.24
			37,000	—	39,000	.23
			39,000	—	41,000	.22
			41,000	—	43,000	.21
			43,000	—	No limit	.20

13.	Multiply line 10 by line 12. Add this amount to your 2010 credit and enter the total on line 9 of your 2010 Form 2441. Enter the following on the dotted line next to line 9 of Form 2441: "CPYE" The amount of this credit for a prior year's expenses Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit.						13.

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Worksheet A. Filled-in Worksheet for 2009 Expenses
Paid in 2010

Use this worksheet to figure the credit you may claim for 2009 expenses paid in 2010.

1.	Enter your 2009 qualified expenses paid in 2009						1.	$2,000
2.	Enter your 2009 qualified expenses paid in 2010						2.	600
3.	Add the amounts on lines 1 and 2						3.	2,600
4.	Enter $3,000 if care was for one qualifying person ($6,000 if for two or more)						4.	3,000
5.	Enter any dependent care benefits received for 2009 and excluded from your income (from 2009 Form 2441, line 28)						5.	0
6.	Subtract the amount on line 5 from the amount on line 4 and enter the result						6.	3,000
7.	Compare your earned income for 2009 and your spouse's earned income for 2009 and enter the smaller amount						7.	14,000
8.	Compare the amounts on lines 3, 6, and 7 and enter the smallest amount						8.	2,600
9.	Enter the amount on which you figured the credit for 2009 (from line 6 of your 2009 Form 2441)						9.	2,000
10.	Subtract the amount on line 9 from the amount on line 8 and enter the result. If zero or less, stop here. You cannot increase your credit by any previous year's expenses						10.	600
11.	Enter your 2009 adjusted gross income (from your 2009 Form 1040, line 38, Form 1040A, line 22, or Form 1040NR, line 36)						11.	30,000
12.	Find your 2009 adjusted gross income in the table below and enter the corresponding decimal amount here						12.	.27

		IF your 2009 adjusted gross income is:				THEN the decimal
			Over		But not over	amount is:
			$ 0	—	$15,000	.35
			15,000	—	17,000	.34
			17,000	—	19,000	.33
			19,000	—	21,000	.32
			21,000	—	23,000	.31
			23,000	—	25,000	.30
			25,000	—	27,000	.29
			27,000	—	29,000	.28
			29,000	—	31,000	.27
			31,000	—	33,000	.26
			33,000	—	35,000	.25
			35,000	—	37,000	.24
			37,000	—	39,000	.23
			39,000	—	41,000	.22
			41,000	—	43,000	.21
			43,000	—	No limit	.20

13.	Multiply line 10 by line 12. Add this amount to your 2010 credit and enter the total on line 9 of your 2010 Form 2441. Enter the following on the dotted line next to line 9 of Form 2441: "CPYE" The amount of this credit for a prior year's expenses Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit.						13.	$162