Child Care Credit/Other Credits : Child and Dependent Care Credit & Flexible Benefit Plans

Can I claim the Child and Dependent Care Credit?

If you paid someone to care for your dependent under age 13 or your disabled dependent or spouse so that you could work or look for work, you may be able to claim the credit for child and dependent care expenses. For specific information on how to qualify for this credit refer to Tax Topic 602, Child and Dependent Care Credit, or Publication 503, Child and Dependent Care Expenses.

My spouse and I both work and are eligible for the Child and Dependent Care Credit. May I include my 5 year old son's parochial school kindergarten tuition cost as a qualified expense in Form 2441, Child Care Expenses?

The expenses for kindergarten do not qualify for the dependent care credit because kindergarten is primarily educational in nature. However, you can count the part of the expenses of sending your child to school that is for your child's care if it can be separated from the expenses of education. For example, you may count the cost of an after school care program even though the school tuition does not qualify.

I paid into a dependent care benefits plan and the amount is shown in Box 10 of my Form W-2. However, the cost paid to the child care provider was more. Can the additional expense not paid into the dependent care benefits plan and not shown in Box 10 of the W-2 be claimed on Form 2441?

That depends on the amount you elected to have contributed to the flexible spending arrangement. The exclusion from income for employer-provided benefits has a maximum dollar amount, while the credit for dependent care expenses has an annual dollar limitation. You must reduce the dollar limits by the amount of excludible dependent care benefits. If you had expenses that you paid yourself and the employer provided benefits were less than the applicable dollar limit, you can also claim the credit. Complete Part III of either Form 2441 (PDF), Child and Dependent Care Expenses, or Form 1040A, Schedule 2 (PDF), Child and Dependent Care Expenses for Form 1040A Filers, to determine the excluded benefits and whether you can claim the credit.

The maximum applicable percentage is 35 percent and the allowable employment-related expenses are $3,000 for one qualifying individual and $6,000 for two or more qualifying individuals. Thus, the maximum credit is $1,050 for one qualifying individual and $2,100 for two or more qualifying individuals.

If my employer did not put the amount I paid into a flexible spending account for dependent care in Box 10 on my Form W-2, can I claim the Child and Dependent Care Tax Credit?

If the flexible spending account was an eligible plan under Internal Revenue Code Section 125, the amount of the salary reduction that was contributed to your account should appear in box 10 of your Form W-2. Request a corrected Form W-2 from your employer. You may claim the child care credit if the contribution to your flexible spending account was less than your annual dollar limitation for eligible expenses. Even if you cannot claim the credit, you must complete Part III of either Form 2441 (PDF), Child and Dependent Care Expenses, or Form 1040A, Schedule 2 (PDF), Child and Dependent Care Expenses for Form 1040A Filers, to exclude your employer provided benefits from your income. If the amount you paid into a flexible spending account reduced your wages in box 1 of Form W-2, it is considered an employer provided benefit.

If I send my child who was under the age of 13 to a day camp instead of a child care facility for the summer, are these deductible expenses?

The cost of day camp, including a camp that specializes in a particular activity such as soccer or computers, may qualify as child care expense, if your main purpose in sending your child is to assure the child's well-being and protection.