Child Care Credit -

[Slippery Pencil]

Client has two qualifying children but only paid child care for one. Form 2441 says you can claim up to $3000 for one qualifying child and $6000 for two. It doesn't say you have to pay for care for both. Am I allowed to claim $6000 since they have two kids?

Code sec 21:

( Definitions of qualifying individual and employment-related expenses

For purposes of this section -

(1) Qualifying individual

The term "qualifying individual" means -

(A) a dependent of the taxpayer who is under the age of 13 and with respect to whom the taxpayer is entitled to a deduction under section 151©,

( a dependent of the taxpayer who is physically or mentally incapable of caring for himself, or

© the spouse of the taxpayer, if he is physically or mentally incapable of caring for himself.

(2) Employment-related expenses

(A) In general

The term "employment-related expenses" means amounts paid for the following expenses, but only if such expenses are incurred to enable the taxpayer to be gainfully employed for any period for which there are 1 or more qualifying individuals with respect to the taxpayer:

(i) expenses for household services, and

(ii) expenses for the care of a qualifying individual. Such term shall not include any amount paid for services outside the taxpayer's household at a camp where the qualifying individual stays overnight.

( Exception

Employment-related expenses described in subparagraph (A) which are incurred for services outside the taxpayer's household shall be taken into account only if incurred for the care of -

(i) a qualifying individual described in paragraph (1)(A), or

(ii) a qualifying individual (not described in paragraph (1)(A)) who regularly spends at least 8 hours each day in the taxpayer's household.

© Dependent care centers

Employment-related expenses described in subparagraph (A) which are incurred for services provided outside the taxpayer's household by a dependent care center (as defined in subparagraph (D)) shall be taken into account only if -

(i) such center complies with all applicable laws and regulations of a State or unit of local government, and

(ii) the requirements of subparagraph ( are met.

(D) Dependent care center defined

For purposes of this paragraph, the term "dependent care center" means any facility which -

(i) provides care for more than six individuals (other than individuals who reside at the facility), and

(ii) receives a fee, payment, or grant for providing services for any of the individuals (regardless of whether such facility is operated for profit).

© Dollar limit on amount creditable

The amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed -

(1) $3,000 if there is 1 qualifying individual with respect to the taxpayer for such taxable year, or

(2) $6,000 if there are 2 or more qualifying individuals with respect to the taxpayer for such taxable year. The amount determined under paragraph (1) or (2) (whichever is applicable) shall be reduced by the aggregate amount excludable from gross income under section 129 for the taxable year.

[Cathy]

Client has two qualifying children but only paid child care for one. Form 2441 says you can claim up to $3000 for one qualifying child and $6000 for two. It doesn't say you have to pay for care for both. Am I allowed to claim $6000 since they have two kids?

Code sec 21:

( Definitions of qualifying individual and employment-related expenses

For purposes of this section -

(1) Qualifying individual

The term "qualifying individual" means -

(A) a dependent of the taxpayer who is under the age of 13 and with respect to whom the taxpayer is entitled to a deduction under section 151©,

( a dependent of the taxpayer who is physically or mentally incapable of caring for himself, or

© the spouse of the taxpayer, if he is physically or mentally incapable of caring for himself.

(2) Employment-related expenses

(A) In general

The term "employment-related expenses" means amounts paid for the following expenses, but only if such expenses are incurred to enable the taxpayer to be gainfully employed for any period for which there are 1 or more qualifying individuals with respect to the taxpayer:

(i) expenses for household services, and

(ii) expenses for the care of a qualifying individual. Such term shall not include any amount paid for services outside the taxpayer's household at a camp where the qualifying individual stays overnight.

( Exception

Employment-related expenses described in subparagraph (A) which are incurred for services outside the taxpayer's household shall be taken into account only if incurred for the care of -

(i) a qualifying individual described in paragraph (1)(A), or

(ii) a qualifying individual (not described in paragraph (1)(A)) who regularly spends at least 8 hours each day in the taxpayer's household.

© Dependent care centers

Employment-related expenses described in subparagraph (A) which are incurred for services provided outside the taxpayer's household by a dependent care center (as defined in subparagraph (D)) shall be taken into account only if -

(i) such center complies with all applicable laws and regulations of a State or unit of local government, and

(ii) the requirements of subparagraph ( are met.

(D) Dependent care center defined

For purposes of this paragraph, the term "dependent care center" means any facility which -

(i) provides care for more than six individuals (other than individuals who reside at the facility), and

(ii) receives a fee, payment, or grant for providing services for any of the individuals (regardless of whether such facility is operated for profit).

© Dollar limit on amount creditable

The amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed -

(1) $3,000 if there is 1 qualifying individual with respect to the taxpayer for such taxable year, or

(2) $6,000 if there are 2 or more qualifying individuals with respect to the taxpayer for such taxable year. The amount determined under paragraph (1) or (2) (whichever is applicable) shall be reduced by the aggregate amount excludable from gross income under section 129 for the taxable year.

Go to the instructions for 2441, page 3 and read the "TIP"......if you pay expenses for the second child...doesn't matter how much, then the full $6,000 can be used. Did the taxpayer incur any expenses AT ALL for the second child...possibly after school care for even one day?

Cathy