Author Topic: Child and Dependent Care Tax Credit, but I'm not working?  (Read 262 times)

TooMuchGlass

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Child and Dependent Care Tax Credit, but I'm not working?
« on: February 06, 2018, 10:22:28 AM »
Howdy.

My wife and I both worked Jan-June 2017. Then we moved, and I stayed home and "looked for work" while my wife worked July-Dec 2017. We paid about 300 bucks for our daughter to go to preschool 2 days a week.

As I read the instructions for form 2441, I'm confused, particularly by this concerning lines 4 and 5:
"For any month that your spouse wasn't a student or disabled, use your spouse's actual earned income if he or she worked during the month."

Here is where I have to put my income and my wife's income separately. If I do that, my income will be 0, and we will not qualify for the credit. But if someone is looking for work, they are supposed to still be eligible for the credit.

This has implications beyond just this year, as I will be in a similar situation for the next several months, and then plan on becoming a full time student in the fall. To compound matters further, this year we decided to put some of my wife's income into a childcare expense account which her employer offers.

Any and all help is appreciated.

MDM

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Re: Child and Dependent Care Tax Credit, but I'm not working?
« Reply #1 on: February 06, 2018, 12:08:57 PM »
The quotes around "looked for work" imply that you really weren't doing so.  In that case, you aren't eligible to take credit for expenses incurred in that time period.

The quote starting "For any month..." is in the section titled "If You or Your Spouse Was a Student or Disabled" and thus pertinent only in those cases.  Your earned income for the year is whatever you earned, not $0.  The question becomes "did you incur child care expenses while earning that income?"

See 2017 Publication 503 - p503.pdf for details, including this example:
Quote
...if  you  work  or  look  for  work  for only 2 months and 15 days during the year and pay ex-
penses of $250 a month, your work-related expenses are limited to $625 (2 1/2 months $250).


Proud Foot

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Re: Child and Dependent Care Tax Credit, but I'm not working?
« Reply #2 on: February 07, 2018, 01:33:59 PM »
You both worked Jan-June. How much was your total childcare costs related to that portion of the year? If the costs were above the max cost ($3k for 1, $6k for 2 or more) and your earnings during that time period were greater than that you should not have any issues.

You will need to read through and understand what MDM linked to help you out for 2018.

TooMuchGlass

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Re: Child and Dependent Care Tax Credit, but I'm not working?
« Reply #3 on: February 10, 2018, 11:39:12 AM »
"The quotes around "looked for work" imply that you really weren't doing so.  In that case, you aren't eligible to take credit for expenses incurred in that time period."

Ok, I see that now. I was trying to note that I was using it as a technical term, but I reread it after your comment and, yeah, you're right. It does look like that. My bad.

The publication linked was exactly what I needed. It answers my questions, and the conclusion I've come to is this:

Because my wife worked and I looked for work, the entire amount we spent for childcare in 2017 ($540) is eligible for the credit. Yippee!