lesson 7
DESCRIPTION
Lesson 7. Credit for Child and Dependent Care Expenses. Objectives. Determine who is eligible for the Credit for Child and Dependent Care Expenses Calculate the credit and the exclusion and report the expenses on the correct Form. Intake and Interview Process. - PowerPoint PPT PresentationTRANSCRIPT
Objectives
• Determine who is eligible for the Credit for Child and Dependent Care Expenses
• Calculate the credit and the exclusion and report the expenses on the correct Form
Five Qualifying Tests
1. Qualifying Person2. Earned Income3. Work-Related Expense4. Joint Return5. Provider Identification
Five Qualifying Tests (Continued)
•Qualifying Person Test– Qualifying Child– Disabled Dependent– Disabled Spouse
Five Qualifying Tests (Continued)
•Earned Income Test− Must have had income during the
year− If married, both needed to work unless spouse was:
A full-time student (for at least 5 months) or
Incapable of self-care
Five Qualifying Tests (Continued)
•Earned Income Test (Continued)– If a spouse was a full-time student
or was incapable of caring for himself/herself, income is considered to be at least:•$250 for one qualifying person•$500 for two or more qualifying persons
Five Qualifying Tests (Continued)
•Work-Related Expense Test•Allows the taxpayer to work or look for work
•Kindergarten expenses no longer qualify
• Joint Return Test•Provider Identification Test
• Due Diligence• Provider Refusal
Limit on Expenses
Amount of eligible expenses limited to the lowest of:
• Lower paid spouse’s earned income (if married)
• Single taxpayer’s earned income• Actual expenses paid• Overall limits of • $3,000 for one qualifying person $6,000 for two or more persons
Figuring the Credit
• Use Schedule 2 for Form 1040A • Use Form 2441 for Form 1040• Complete Part III of the form if the
taxpayers received benefits under a dependent care benefits program
Quality Review (QR)
Form 8158 – Quality Review Checklist
Adjustments, Deductions and Credits Section