Frequently Asked Tax Questions
Child Care Credit, Other Credits - Child and Dependent Care Credit & Flexible Benefit
Plans
Rev. date: 08/04/2012
The expense of tuition for kindergarten does not qualify for the child and dependent care credit because kindergarten is primarily educational in
nature.
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The expense of your child's care at school may qualify for the credit, if it can be separated from the expense of your child's
education.
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For example, the expense of an afterschool care program may qualify, even though the expense of school tuition does not
qualify.
Rev. date: 08/04/2012
This type of plan is an agreement to voluntarily reduce your salary in return for an employer-provided fringe
benefit.
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These plans give you a choice of whether to receive cash wages or a benefit for dependent
care.
-
You are receiving a tax benefit because you are not paying taxes on the money that is set aside to pay for the dependent
care.
Rev. date: 08/21/2012
You must complete Part III of
Form 2441 (PDF),
Child and Dependent Care Expenses, to exclude the dependent care benefit from income even if you cannot claim the child and dependent care
credit.
-
Enter your total employer-provided dependent care benefit on the correct line (this amount should appear in Box 10 of your Form W-2) and your qualified expenses on the correct
line.
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The last lines of Part III will help you determine whether you can also take the credit and the dollar limit on qualified
expenses.
-
Also complete Part I,
Persons or Organizations Who Provided the Care.
Rev. date: 08/04/2012
Yes, if you meet the other requirements to claim the child and dependent care credit, but are missing the social security number or other taxpayer identifying number of a provider, you can still claim the credit by demonstrating "due diligence" in attempting to secure this
information.
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If a provider of child care refuses to give a taxpayer the identifying information, the taxpayer can still claim the
credit.
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The taxpayer must provide whatever information is available about the provider (such as name and address) on
Form 2441 (PDF),
Child and Dependent Care Expenses.
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Write "see page 2" in the columns requesting the missing information.
-
Write at the bottom of page 2 that the provider refused to give the requested
information.
-
This statement will show that the taxpayer used due diligence in trying to secure the identifying
information.
Rev. date: 08/04/2012
These payments may be qualified child care expenses if the family member babysitting is not your dependent or your child under age 19 and you otherwise qualify to claim the child and dependent care
credit.
Who is responsible for taxes on these payments depends on whether your family member is your employee or is self-employed (an independent
contractor).
-
See
Publication 15-A (PDF),
Employer's Supplemental Tax Guide,
for a discussion of how to tell whether an individual who is performing services
for you is an employee or an independent contractor.
-
If your family member is not your employee, then the family member will be responsible for paying income taxes and any applicable self-employment taxes on the income
earned.
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If your family member is your employee, then you are generally responsible for withholding and paying the
taxes.
-
However special rules apply to family employees. See
Publication 15,
Circular E, Employer's Tax Guide, for these rules.
-
If your family member provides the services in your home, different rules would apply. See
Publication 926,
Household Employer's Tax Guide, for more information on these rules.
Rev. date: 08/21/2012
Daycare payments for an elderly person may qualify as dependent care expenses if the person receiving the care is your spouse or dependent who lives with you and is incapable of
self-care.
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