Credit for Child and Dependent Care Expenses

By Brian Cole, Brian Cole Tax Services

You may qualify for a credit for child or dependent care expenses up to $3,000 for one child and up to $6,000 for two or more. Your eligibility is as follows.

1. The taxpayer (and spouse if married filing jointly) must have earned income. There are exceptions to this that your tax professional will have to evaluate.

2. Expenses must be paid so taxpayer (and spouse) can work or look for work. Expenses must be prorated if the work test is only met for part of the year.

3. Expenses are not eligible if paid to the taxpayer's spouse, a person the taxpayer can claim as a dependent, or the taxpayer's child under age 19 at the end of the year.

4. If married, taxpayers must generally file a joint return.

5. The taxpayer must identify the care provider on Form 2441.

6. Amounts reimbursed under an employer plan reduce the expenses available for the credit. However, if the employer benefits do not exceed the $3,000 or $6,000 limits, a tax credit may be available for the difference.