figure b. is a child of divorced or separated parents a qualifying person?  

Taxmap/pubs/p503-000.htm#TXMP66829cd2 Child of Divorced or   Separated Parents

Child of Divorced or Separated Parents

To be a qualifying person, your child usually must be your dependent for whom you can claim an exemption. But there is an exception to this that applies if all of the following are true.

 

1. You are divorced or separated under a decree of divorce or separate maintenance or a written separation agreement, or you lived apart from the other parent at all times during the last 6 months of the year.
2. One or both parents had custody of the child for more than half of the year.
3. One or both parents provided more than half of the child's support for the year.
4. The child was under age 13 or was physically or mentally not able to care for himself or herself.
5. Either:
   1. The custodial parent signed Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents, or a similar statement, agreeing not to claim the child's exemption for the year, or
   2. The noncustodial parent provided at least $600 for the child's support and can claim the child's exemption under a pre-1985 decree or separate maintenance or written agreement.

For purposes of 5(a), a similar statement includes a divorce decree or separation agreement that went into effect after 1984 that allows the noncustodial parent to claim the child's exemption without any conditions, such as payment of support.

If the exception applies and you are the custodial parent, you can treat your child as a qualifying person even if you cannot claim the child's exemption. If you are the noncustodial parent, you cannot treat your child as a qualifying person even if you can claim the child's exemption.

If the exception does not apply, use the rules described earlier to determine whether your child is a qualifying person.

You can use Figure B to see whether this exception applies to you.

Taxmap/pubs/p503-000.htm#TXMP6d100725
Example.

You are divorced and have custody of your 8-year-old child. You sign Form 8332 to allow your ex-spouse to claim the exemption. You pay childcare expenses so you can work. Your child is a qualifying person and you, the custodial parent, can claim the credit for those expenses, even though your ex-spouse claims an exemption for the child.

Taxmap/pubs/p503-000.htm#TXMP18c045c4 Custodial parent.

You are the custodial parent if, during the year, you have custody of your child longer than your child's other parent has custody.

Taxmap/pubs/p503-000.htm#TXMP48a4c202 Keeping Up a Home Test

Costs of keeping up home.

To claim the credit, you must keep up a home. You and one or more qualifying persons must live in the home.

You are keeping up a home if you (and your spouse if you are married) pay more than half the cost of running it for the year. If you live in your home with a qualifying person for less than a full year, see Cost determined monthly, later.

Taxmap/pubs/p503-000.htm#TXMP205fa702 Home.

The home you keep must be the main home for both you and the qualifying person. Your home can be the main home even if the qualifying person does not live there all year because of his or her:

1. Birth,
2. Death, or
3. Temporary absence due to:
   1. Sickness,
   2. School,
   3. Business,
   4. Vacation,
   5. Military service, or
   6. Custody agreement.

Taxmap/pubs/p503-000.htm#TXMP49261185 Costs of keeping up a home.

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.

Taxmap/pubs/p503-000.htm#TXMP2b9165ff Costs not included.

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/pubs/p503-000.htm#TXMP213507f1 Public assistance benefits.

Payments you receive from a state that you use to keep up your home are funds provided by the state, not by you. You must provide more than half the cost of keeping up your home from your own funds to claim the credit for child and dependent care expenses.

Taxmap/pubs/p503-000.htm#TXMP290c3a0c Families living together.

If you and your family share living space with another family, your family and the other family are treated as separate households. (This rule applies only for purposes of the credit for child and dependent care expenses.) If you provide more than half the cost of running your household, you are keeping up a home.

Taxmap/pubs/p503-000.htm#TXMP1b454a35 Cost determined monthly.

If a qualified person lived with you for less than a full year, figure the cost of keeping up your home for that period. To do this, divide your cost for the year by 12 and multiply the result by the number of months the person lived with you. Count any partial month as a full month.

Taxmap/pubs/p503-000.htm#TXMP688077f2
Example.

Joe lives in his home all year, but his son, who is a qualifying person, lives in it only from June 20 to December 31. The cost of keeping up his home for the full year is $6,600. To meet the keeping up a home test, Joe must pay more than half the cost of keeping up the home from June 1 to December 31. He figures half the cost as follows.

	Cost of Keeping Up Joe's Home That He Must Pay
1)	Cost of keeping up the home for the full year	$	6,600
2)	Divided by the number of months in a year		÷ 12
3)	Monthly cost of keeping up the home	$	550
4)	Multiplied by number of months the qualifying  person lived in the home		× 7
5)	Cost of keeping up the home while the   qualifying person lived there	$	3,850
6)	Multiplied by one-half		× .50
7)	Half the cost of keeping up the home while the qualifying person lived there	$	1,925

To meet the keeping up a home test, Joe must pay more than $1,925 to keep up his home from June 1 to December 31.

Taxmap/pubs/p503-000.htm#TXMP3f8f655e Earned Income Test

Earned Income Test

To claim the credit, you (and your spouse if you are married) must have earned income during the year.

Taxmap/pubs/p503-000.htm#TXMP2100ced4 Earned income.

Earned 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.

Earned income also includes nontaxable employee compensation such as parsonage allowances, meals and lodging furnished for the convenience of the employer, voluntary salary deferrals, military basic quarters and subsistence allowances and in-kind quarters and subsistence, and military pay earned in a combat zone.

Taxmap/pubs/p503-000.htm#TXMP3c8a2e77 Members of certain religious faiths opposed to social security.

This section is for 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. These forms are:

• Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, and
• Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits, for use by members of recognized religious groups.

Each form is discussed in this section in terms of what is or is not earned income for purposes of the child and dependent care credit. For information on the use of these forms, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers.

Taxmap/pubs/p503-000.htm#TXMP5f20d165 Form 4361.

Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee are earned income. This includes wages, salaries, tips, and other employee compensation. Other employee compensation includes earned income that is not taxable, such as a housing allowance or the rental value of a parsonage that you receive as part of your pay for services as an employee.

However, amounts you received for ministerial duties, but not as an employee, are not net earnings from self-employment for purposes of the child and dependent care credit. Examples include fees for performing marriages and honoraria for delivering speeches. Any income or loss from these activities is not taken into account in figuring earned income.

Any amount you received for work that is not related to your ministerial duties is earned income.

Taxmap/pubs/p503-000.htm#TXMP7dbaa3a1 Form 4029.

Whether or not you have an approved Form 4029, all wages, salaries, tips, and other employee compensation are earned income.

However, amounts you received as a self-employed individual are not net earnings from self-employment for purposes of the child and dependent care credit, and are not taken into account in figuring earned income.

Taxmap/pubs/p503-000.htm#TXMP7f539090 What is not earned income?

Earned income does not include pensions or annuities, social security payments, workers' compensation, interest, dividends, or unemployment compensation. It also does not include scholarship or fellowship grants, except amounts paid to you (and reported on Form W-2) for teaching, research, or other services.

Taxmap/pubs/p503-000.htm#TXMP0a819107 Rule for student-spouse or spouse not able to care for self.

Your spouse is treated as having earned income for any month that he or she is:

1. A full-time student, or
2. Physically or mentally not able to care for himself or herself.

Figure the earned income of the nonworking spouse, described under (1) or (2) above, as shown under Earned Income Limit under How To Figure the Credit, 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 physically or mentally not able to care for yourselves, only one of you can be treated as having earned income in that month.

Taxmap/pubs/p503-000.htm#TXMP6a2eda55 Full-time student.

You are a full-time student if you are enrolled at and attend a school for the number of hours or classes that the school considers full time. You must have been a student for some part of each of 5 calendar months during the year. (The months need not be consecutive.) If you attend school only at night, you are not a full-time student. However, as part of your full-time course of study, you may attend some night classes.

Taxmap/pubs/p503-000.htm#TXMP1522305f School.

The term "school" includes elementary schools, junior and senior high schools, colleges, universities, and technical, trade, and mechanical schools. It does not include on-the-job training courses, correspondence schools, and night schools.

Taxmap/pubs/p503-000.htm#TXMP30c59b0c Work-Related Expense Test

Child 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 you are married) to work or look for work.
• They are for a qualifying person's care.

Taxmap/pubs/p503-000.htm#TXMP182d1fe1 Working or Looking for Work

Working or Looking for Work

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 physically or mentally not 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.

Whether your expenses allow you to work or look for work depends on the facts. For example, the cost of a baby sitter while you and your spouse go out to eat is not normally a work-related expense.

An expense is not considered work related merely because you had it while you were working. The purpose of the expense must be to enable you to work.

Taxmap/pubs/p503-000.htm#TXMP5d32893f Volunteer work.

For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary.

Taxmap/pubs/p503-000.htm#TXMP632dd708 Work for part of year.

If 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/pubs/p503-000.htm#TXMP1a3b9d2f Payments while you are out sick.

Do not count as work-related expenses amounts you pay for child and dependent care while you are off work because of illness. These amounts are not paid to allow you to work. This applies even if you get sick pay and are still considered an employee.

Taxmap/pubs/p503-000.htm#TXMP561dcc95 Care of a Qualifying Person

Care of a Qualifying Person

To 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 the care.

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.

Taxmap/pubs/p503-000.htm#TXMP1580ffd5 Expenses not for care.

Expenses for care do not include amounts you pay for food, 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. Otherwise, see the discussion of Expenses partly work related, later.

Taxmap/pubs/p503-000.htm#TXMP0ab1bc1d Education.

Expenses to attend first grade or a higher grade are not expenses for care. Do not use these expenses to figure your credit.

Taxmap/pubs/p503-000.htm#TXMP7ca27057
Example 1.

You take your 3-year-old child to a nursery school that provides lunch and a few educational activities as part of its preschool childcare service. You can count the total cost when you figure the credit.

Taxmap/pubs/p503-000.htm#TXMP578f2396
Example 2.

You 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/pubs/p503-000.htm#TXMP2e2bc21a Care outside your home.

You 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/pubs/p503-000.htm#TXMP5bfae89f Dependent care center.

You 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/pubs/p503-000.htm#TXMP7f1af8cc Camp.

The cost of sending your child to an overnight camp is not considered a work-related expense.

Taxmap/pubs/p503-000.htm#TXMP3d15cb98 Transportation.

The cost of getting a qualifying person from your home to the care location and back, or from the care location to school and back, is not considered a work-related expense. This includes the costs of bus, subway, taxi, or private car. Also, if you pay the transportation cost for the care provider to come to your home, you cannot count this cost as a work-related expense.

Taxmap/pubs/p503-000.htm#TXMP24ecd9aa Household Services

Expenses 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.

Taxmap/pubs/p503-000.htm#TXMP18438130 Definition.

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.

Taxmap/pubs/p503-000.htm#TXMP109602a2 Housekeeper.

In this publication, the term housekeeper refers to any household employee whose services include the care of a qualifying person.

Taxmap/pubs/p503-000.htm#TXMP26209baa Expenses partly work related.

If part of an expense is work related (for either household services or the care of a qualifying person) and part is for other purposes, you have to divide the expense. To figure your credit, count only the part that is work related. However, you do not have to divide the expense if only a small part is for other purposes.

Taxmap/pubs/p503-000.htm#TXMP182ef5f5
Example.

You pay a housekeeper to care for your 9-year-old and 15-year-old children so you can work. The housekeeper spends most of the time doing normal household work and spends 30 minutes a day driving you to and from work. You do not have to divide the expenses. You can treat the entire expense of the housekeeper as work related because the time spent driving is minimal. Nor do you have to divide the expenses between the two children, even though the expenses are partly for the 15-year-old child who is not a qualifying person, because the expense is also partly for the care of your 9-year-old child, who is a qualifying person. However, the dollar limit (discussed later) is based on one qualifying person, not two.

Taxmap/pubs/p503-000.htm#TXMP56d328f9 Meals and lodging provided for housekeeper.

If you have expenses for meals that your housekeeper eats in your home because of his or her employment, count these as work-related expenses. If you have extra expenses for providing lodging in your home to the housekeeper, count these as work-related expenses also.

Taxmap/pubs/p503-000.htm#TXMP163b4d80
Example.

To provide lodging to the housekeeper, you move to an apartment with an extra bedroom. You can count the extra rent and utility expenses for the housekeeper's bedroom as work related. However, if your housekeeper moves into an existing bedroom in your home, you can count only the extra utility expenses as work related.

Taxmap/pubs/p503-000.htm#TXMP6ebdf836 Taxes paid on wages.

The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. For more information on a household employer's tax responsibilities, see Employment Taxes for Household Employers, later.

Taxmap/pubs/p503-000.htm#TXMP1dd9880c Payments to Relatives

Payments to Relatives

You 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:

1. A dependent for whom you (or your spouse if you are married) can claim an exemption, or
2. Your child who is under age 19 at the end of the year, even if he or she is not your dependent.

Taxmap/pubs/p503-000.htm#TXMP30f8c445 Joint Return Test

Joint Return Test

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 a separate return and still take the credit.

Taxmap/pubs/p503-000.htm#TXMP6bad8b23 Legally separated.

You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. You are eligible to take the credit on a separate return.

Taxmap/pubs/p503-000.htm#TXMP4b9e82d3 Married and living apart.

You are not considered married and are eligible to take the credit if all the following apply.

1. You file a separate return.
2. Your home is the home of a qualifying person for more than half the year.
3. You pay more than half the cost of keeping up your home for the year.
4. Your spouse does not live in your home for the last 6 months of the year.

Taxmap/pubs/p503-000.htm#TXMP0350defb Death of spouse.

If 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 separate return.

Taxmap/pubs/p503-000.htm#TXMP0f39689b Provider Identification Test

Provider Identification Test

You must identify all persons or organizations that provide care for your child or dependent. Use Part I of Form 2441 or Schedule 2 (Form 1040A) to show the information.

Taxmap/pubs/p503-000.htm#TXMP78f558be Information needed.

To identify the care provider, you must give the provider's:

1. Name,
2. Address, and
3. 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 one of certain tax-exempt organizations (such as a church or school). In this case, write "Tax-Exempt" in the space where the tax form calls for the number.

If you cannot provide all of the information or 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/pubs/p503-000.htm#TXMP3a00fb66 Getting the information.

You can use Form W-10, Dependent Care Provider's Identification and Certification, to request the required information from the care provider. If you do not use Form W-10, you can get the information from:

1. A copy of the provider's social security card,
2. A copy of the provider's driver's license (in a state where the license includes the social security number),
3. A copy of the provider's completed Form W-4, Employee's Withholding Allowance Certificate, if he or she is your household employee,
4. A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or
5. A letter or invoice from the provider if it shows the necessary 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/pubs/p503-000.htm#TXMP4edd60b8 Due diligence.

If 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/pubs/p503-000.htm#TXMP6e3e76f1 Provider refusal.

If the provider refuses to give you the 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 Page 2" in the columns calling for the information you do not have. On the bottom of page 2, explain that you requested the information from the care provider, but the provider did not give you the information. This statement will show that you used due diligence in trying to furnish the necessary information.

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