Tests To Claim the Credit To be able to claim the credit for child and dependent careexpenses, you must file Form 1040 or Form 1040A, not Form 1040EZ, andmeet all the following tests. The care must be for one or more qualifying persons who areidentified on the form you use to claim the credit. (SeeQualifying Person Test.) You (and your spouse if you are married) must keep up a homethat you live in with the qualifying person or persons. (SeeKeeping Up a Home Test, later.) You (and your spouse if you are married) must have earnedincome during the year. (However, see Rule for student-spouse orspouse not able to care for self under Earned Income Test,later.) You must pay child and dependent care expenses so you (andyour spouse if you are married) can work or look for work. (SeeWork-Related Expense Test, later.) You must make payments for child and dependent care tosomeone you (or your spouse) cannot claim as a dependent. If you makepayments to your child, he or she cannot be your dependent and must beage 19 or older by the end of the year. (See Payments toRelatives under Work-Related Expense Test,later.) Your filing status must be single, head of household,qualifying widow(er) with dependent child, or married filing jointly.You must file a joint return if you are married, unless an exceptiondiscussed later, under Joint Return Test, applies toyou. You must identify the care provider on your tax return. (SeeProvider Identification Test, later.) If you exclude dependent care assistance benefits providedby your employer, you must exclude less than the dollar limit forqualifying expenses (generally, less than $2,400 if one qualifyingperson was cared for, or less than $4,800 if two or more qualifyingpersons were cared for). (See Reduced Dollar Limit underHow To Figure the Credit, later.) These tests are presented in Figure A and are alsoexplained in detail in this publication. Figure A. Can you claim the credit Qualifying Person Test Your child and dependent care expenses must be for the care of oneor more qualifying persons. A qualifying person is: Your dependent who was under age 13 when the care wasprovided and for whom you can claim an exemption, Your spouse who was physically or mentally not able to carefor himself or herself, or Your dependent who was physically or mentally not able tocare for himself or herself and for whom you can claim an exemption(or could claim an exemption except the person had $2,750 or more ofgross income). If you are divorced or separated, see Child of Divorced orSeparated Parents, later, to determine which parent may treatthe child as a qualifying person. For information on claiming an exemption, see Publication 501. Physically or mentally not able to care for oneself.Persons who cannot dress, clean, or feed themselves because ofphysical or mental problems are considered not able to care forthemselves. Also, persons who must have constant attention to preventthem from injuring themselves or others are considered not able tocare for themselves. Person qualifying for part of year.You determine a person's qualifying status each day. For example,if the person for whom you pay child and dependent care expenses nolonger qualifies on September 16, count only those expenses throughSeptember 15. Also see Dollar Limit under How ToFigure the Credit, later. Taxpayer identification number.You must include on your return the name and taxpayeridentification number (generally the social security number) of thequalifying person(s). If the correct information is not shown, thecredit may be reduced or disallowed. Individual taxpayer identification number (ITIN) for aliens.If your qualifying person is a nonresident or resident alien whodoes not have and cannot get a social security number (SSN), use thatperson's ITIN. The ITIN is entered wherever an SSN is requested on atax return. If the alien who is required to furnish a taxpayeridentifying number does not have an ITIN, he or she must apply for anITIN on Form W-7, Application for IRS Individual TaxpayerIdentification Number. An ITIN is for tax use only. It does not entitle the holder tosocial security benefits or change the holder's employment orimmigration status under U.S. law. Adoption taxpayer identification number (ATIN).If your qualifying person is a child who was placed in your homefor adoption and for whom you do not have an SSN, you must get an ATINfor the child. File Form W-7A, Application for TaxpayerIdentification Number for Pending U.S. Adoptions. Child of Divorced orSeparated Parents To be a qualifying person, your child usually must be yourdependent for whom you can claim an exemption. But an exception mayapply if you are divorced or separated. Under the exception, if youare the custodial parent, you can treat your child as a qualifyingperson even if you cannot claim the child's exemption. If you are thenoncustodial parent, you cannot treat your child as a qualifyingperson even if you can claim the child's exemption. This exception applies if all of the following are true. One or both parents had custody of the child for more thanhalf of the year. One or both parents provided more than half of the child'ssupport for the year. Either: The custodial parent signed Form 8332,Release of Claim to Exemption for Child of Divorced orSeparated Parents, or a similar statement, agreeing not to claimthe child's exemption for the year, or keno spiel strategieThe noncustodial parent provided at least $600 for thechild's support and can claim the child's exemption under a pre-1985decree of divorce or separate maintenance, or writtenagreement. For purposes of 3(a), a similar statement includes a divorcedecree or separation agreement that went into effect after 1984 thatallows the noncustodial parent to claim the child's exemption withoutany conditions, such as payment of support. You can use Figure B to see whether this exceptionapplies to you. If it applies, only the custodial parent can treat thechild as a qualifying person. If the exception does not apply, followthe regular rules for a qualifying person under Qualifying PersonTest, earlier. Example.You are divorced and have custody of your 8-year-old child. Yousign Form 8332 to allow your ex-spouse to claim the exemption. You paychild care expenses so you can work. Your child is a qualifying personand you, the custodial parent, can claim the credit for thoseexpenses, even though your ex-spouse claims an exemption for thechild. Custodial parent.You are the custodial parent if, during the year, you have custodyof your child longer than your child's other parent has custody. Divorced or separated.For purposes of determining whether your child is a qualifyingperson, you are considered divorced or separated if eitherof the following applies. You are divorced or separated under a decree of divorce orseparate maintenance or a written separation agreement. You lived apart from your spouse for all of the last 6months of the year. Figure B. Is a Child of Divorced or Separated Parents a Qualifying Person? Keeping Up a Home Test To claim the credit, you must keep up a home. You and one or morequalifying persons must live in the home. You are keeping up a home if you (and your spouse if you aremarried) pay more than half the cost of running it for the year. Ifyou live in your home with a qualifying person for less than a fullyear, see Cost determined monthly, later. Home.The home you keep must be the main home for both you and thequalifying person. Your home can be the main home even if thequalifying person does not live there all year because of his or her: Birth, Death, or Temporary absence due to: Sickness, School, Business, Vacation, Military service, or Custody agreement. 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. Costs not included.The costs of keeping up a home do not include payments forclothing, education, medical treatment, vacations, life insurance,transportation, or mortgage principal. They also do not include the purchase, permanent improvement, orreplacement of property. For example, you cannot include the cost ofreplacing a water heater. However, you can include the cost ofrepairing a water heater. Public assistance benefits.Payments you receive from a state that you use to keep up your homeare funds provided by the state, not by you. You must provide morethan half the cost of keeping up your home from your own fundscheap hotels in Funchalto claim the credit for child and dependent care expenses. Families living together.If you and your family share living space with another family, yourfamily and the other family are treated as separate households. (Thisrule applies only for purposes of the credit for child and dependentcare expenses.) If you provide more than half the cost of running yourhousehold, you are keeping up a home. 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 thenumber of months the person lived with you. Count any partial month asa full month. Example.Joe lives in his home all year, but his son, who is a qualifyingperson, lives in it only from June 20 to December 31. The cost ofkeeping up his home for the full year is $6,600. To meet the keepingup a home test, Joe must pay more than half the cost of keeping up thehome from June 1 to December 31. He figures half the cost as follows.   Cost of Keeping Up Joe's Home That He MustPay   1) Cost of keeping up the home for the fullyear $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 thequalifying 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. Earned Income Test To claim the credit, you (and your spouse if you are married) musthave earned income during the year. Earned income.Earned income includes wages, salaries, tips, other employeecompensation, and net earnings from self-employment. A net loss fromself-employment reduces earned income. Earned income also includesstrike benefits and any disability pay you report as wages. Certain nontaxable earned income included.It also includes nontaxable earned income such as parsonageallowances, meals and lodging furnished for the convenience of theemployer, voluntary salary deferrals, military basic quarters andsubsistence allowances and in-kind quarters and subsistence, andmilitary pay earned in a combat zone. Members of certain religious faiths opposed to socialsecurity.This section is for persons who are members of certain religiousfaiths that are opposed to participation in Social Security Actprograms and have an IRS-approved form that exempts certain incomefrom social security and Medicare taxes. These forms are: Form 4361, Application for Exemption FromSelf-Employment Tax for Use by Ministers, Members of Religious Ordersand Christian Science Practitioners, or Form 4029, Application for Exemption From SocialSecurity and Medicare Taxes and Waiver of Benefits, for use bymembers of recognized religious groups. Each form is discussed in this section in terms of what is or isnot 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 Clergyand Religious Workers. Form 4361.If you have an approved Form 4361, amounts you received forperforming ministerial duties as an employee are earnedincome. This includes wages, salaries, tips, and other employeecompensation. Other employee compensation includes earned income thatis not taxable such as housing allowances or the rental value of aparsonage that you receive as part of your pay for services as anemployee. Amounts you received for ministerial duties, but not as anemployee, are not net earnings from self-employment. Examplesinclude fees for performing marriages and honoraria for deliveringspeeches. Any income or loss from these activities is not taken intoaccount in figuring earned income. Any amount you received for work that is not related to yourministerial duties is earned income. Form 4029.If you have an approved Form 4029, all wages, salaries, tips, andother employee compensation are earned income. Amounts you received as a self-employed individual arenot net earnings from self-employment and are not taken into accountin figuring earned income. What is not earned income?Earned income does not include pensions or annuities, socialsecurity payments, workers' compensation, interest, dividends, orunemployment compensation. It also does not include scholarship orfellowship grants, except amounts paid to you (and reported on FormW-2) for teaching, research, or other services. Rule for student-spouse or spouse not able to care for self.Your spouse is treated as having earned income for any month thathe or she is: A full-time student, or Physically or mentally not able to care for himself orherself. Figure the earned income of the nonworking spouse, described under(1) or (2) above, as shown under Earned Income Limit underHow To Figure the Credit, later. This rule applies to only one spouse for any one month. If, in thesame month, both you and your spouse do not work and are eitherfull-time students or physically or mentally not able to care foryourselves, only one of you can be treated as having earned income inthat month. Full-time student.You are a full-time student if you are enrolled at and attend aschool for the number of hours or classes that the school considersfull time. You must have been a student for some part of each of 5calendar 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 attendsome night classes. School.The term school includes elementary schools, junior and senior highschools, colleges, universities, and technical, trade, and mechanicalschools. It does not include on-the-job training courses,correspondence schools, and night schools. Work-Related Expense Test Child and dependent care expenses must be work related to qualifyfor the credit. Expenses are considered work related only if both ofthe following are true. They allow you (and your spouse if you are married) to workor look for work. They are for a qualifying person's care. Working or Looking for Work To be work related, your expenses must allow you to work or lookfor work. If you are married, generally both you and your spouse mustwork or look for work. Your spouse is treated as working during anymonth he or she is a full-time student or is physically or mentallynot 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 donot find a job and have no earned income for the year, you cannot takethis credit. See hotels KastrupEarned Income Test, earlier. Whether your expenses allow you to work or look for work depends onthe facts. For example, the cost of a babysitter while you and yourspouse go out to eat is not normally a work-related expense. Expenses are not considered work related merely because you hadthem while you were working. They must enable you to be gainfullyemployed. For example, you are not gainfully employed if you do unpaidvolunteer work or volunteer work for a nominal salary. Work for part of year. If you work or actively look for work during only part of theperiod covered by the expenses, then you must figure your expenses foreach day. For example, if you work all year and pay care expenses of$200 a month ($2,400 for the year), all the expenses are work related.However, if you work or look for work for only 2 months and 15 daysduring the year and pay expenses of $200 a month, your work-relatedexpenses are limited to $500 (2 1/2 months $200). Payments while you are out sick.Do not count as work-related expenses amounts you pay for child anddependent care while you are off work because of illness. Theseamounts are not paid to allow you to work. This applies even if youget sick pay and are still considered an employee. Care of a Qualifying Person To be work related, your expenses must be to provide care for aqualifying person. You do not have to choose the least expensive wayof providing the care. Expenses are for the care of a qualifying person only if theirmain purpose is the person's well-being and protection. Expenses for household services qualify if part of theservices is for the care of qualifying persons. See HouseholdServices, later. Expenses not for care.Expenses for care do not include amounts you pay for food,clothing, education, and entertainment. However, you can include smallamounts paid for these items if they are incident to and cannot beseparated from the cost of caring for the qualifying person.Otherwise, see the discussion of Expenses partly work-related,later. Education.Expenses to attend first grade or a higher grade are not expensesfor care. Do not use these expenses to figure your credit. Example 1.You take your 3-year-old child to a nursery school that provideslunch and a few educational activities as a part of its preschoolchild-care service. You can count the total cost when you figure thecredit. Example 2.Your 5-year-old child goes to kindergarten in the morning. In theafternoon, she attends an after-school day care program at the sameschool. Your total cost for sending her to the school is $3,000, ofwhich $1,800 is for the after-school day care program. Only the $1,800qualifies for figuring the credit. Example 3.You place your 10-year-old child in a boarding school so you canwork full time. Only the part of the boarding school expense that isfor the care of your child is a work-related expense. You can countthat part of the expense in figuring your credit if it can beseparated from the cost of education. You cannot count any part of theamount you pay the school for your child's education. Care outside your home.You can count the cost of care provided outside your home if thecare is for your dependent under age 13, or any other qualifyingperson who regularly spends at least 8 hours each day in your home. Dependent care center.You can count care provided outside your home by a dependent carecenter only if the center complies with all state and localregulations that apply to these centers. A dependent care center is a place that provides care for more thansix 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. Camp.The cost of sending your child to an overnight camp is notconsidered a work-related expense. Transportation.The cost of getting a qualifying person from your home to the carelocation and back, or from the care location to school and back, isnot considered a work-related expense. This includes thecosts of bus, subway, taxi, or private car. Also, if you pay thetransportation cost for the care provider to come to your home, youcannot count this cost as a work-related expense. Household Services Expenses you pay for household services meet the work-relatedexpense test if they are at least partly for the well-being andprotection of a qualifying person. Definition.Household services are ordinary and usual services done in andaround your home that are necessary to run your home. They include theservices of a housekeeper, maid, or cook. However, they do not includethe services of a chauffeur, bartender, or gardener. Housekeeper.In this publication, the term housekeeper refers to any householdemployee whose services include the care of a qualifying person. Expenses partly work-related.If part of an expense is work-related (for either householdservices or the care of a qualifying person) and part is for otherpurposes, you have to divide the expense. To figure your credit, countonly the part that is work-related. However, you do not have to dividethe expense if only a small part is for other purposes. Example.You pay a housekeeper to care for your 9-year-old and 15-year-oldchildren so you can work. The housekeeper spends most of the timedoing normal household work and spends 30 minutes a day driving you toand from work. You do not have to divide the expenses. You can treatthe entire expense of the housekeeper as work-related because the timespent driving is minimal. Nor do you have to divide the expensesbetween the two children, even though the expenses are partly for the15-year-old child who is not a qualifying person, because the expenseis also partly for the care of your 9-year-old child, who is aqualifying person. However, the dollar limit (discussed later) isbased on one qualifying person, not two. Meals and lodging provided for housekeeper.If you have expenses for meals that your housekeeper eats in yourhome because of his or her employment, count these as work-relatedexpenses. If you have extra expenses for providing lodging in yourhome to the housekeeper, count these as work-related expenses also. Example.To provide lodging to the housekeeper, you move to an apartmentwith an extra bedroom. You can count the extra rent and utilityexpenses for the housekeeper's bedroom as work related. However, ifyour housekeeper moves into an existing bedroom in your home, you canonly count the extra utility expenses as work related. Taxes paid on wages.The taxes you pay on wages for qualifying child and dependent careservices are work-related expenses. For more information on ahousehold employer's tax responsibilities, see Employment Taxesfor Household Employers, later. Payments to Relatives You can count work-related payments you make to relatives who arenot your dependents, even if they live in your home. However, do notcount any amounts you pay to: A dependent for whom you (or your spouse if you are married)can claim an exemption, or Your child who is under age 19 at the end of the year, evenif he or she is not your dependent. Joint Return Test Generally, married couples must file a joint return to take thecredit. However, if you are legally separated or living apart fromyour spouse, you may be able to file a separate return and still takethe credit. Legally separated.You are not considered married if you are legally separated fromyour spouse under a decree of divorce or separate maintenance. You areeligible to take the credit on a separate return. Married and living apart.You are not considered married and are eligible to take the creditif all the following apply. You file a separate return. Your home is the home of a qualifying person for more thanhalf the year. hotels Besenova b&bYou pay more than half the cost of keeping up your home forthe year. Your spouse does not live in your home for the last 6 monthsof the year. Death of spouse.If your spouse died during the year and you do not remarry beforethe end of the year, you generally must file a joint return to takethe credit. If you do remarry before the end of the year, the creditcan be claimed on your deceased spouse's separate return. Provider Identification Test You must identify all persons or organizations that provide carefor your child or dependent. Use Part I of Form 2441 or Schedule 2(Form 1040A) to show the information. Information needed.To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. If the care provider is an individual, the taxpayer identificationnumber is his or her social security number or individual taxpayeridentification number. If the care provider is an organization, thenit is the employer identification number (EIN). You do not have to show the taxpayer identification number if thecare provider is one of certain tax-exempt organizations (such as achurch or school). In this case, write "Tax-Exempt" in the spacewhere the tax form calls for the number. If you cannot provide all of the information or the information isincorrect, you must be able to show that you used due diligence(discussed later) in trying to furnish the necessary information. Getting the information.You can use Form W-10, Dependent CareProvider's Identification and Certification, to request therequired information from the care provider. If you do not use FormW-10, you can get the information from: A copy of the provider's social security card, A copy of the provider's driver's license (in a state wherethe license includes the social security number), A copy of the provider's completed Form W-4,Employee's Withholding Allowance Certificate, if he or sheis your household employee, A copy of the statement furnished by your employer if theprovider is your employer's dependent care plan, or A letter or invoice from the provider if it shows thenecessary information. Files: You should keep this informationwith your tax records. Do not sendForm W-10 (or other document containing this information) to theInternal Revenue Service. Due diligence.If the care provider information you give is incorrect orincomplete, your credit may not be allowed. However, if you can showthat you used due diligence in trying to supply the information, youcan still claim the credit. You can show due diligence by getting and keeping the provider'scompleted Form W-10 or one of the other sources of informationlisted earlier. Care providers can be penalized if they do not providethis information to you or if they provide incorrect information. Provider refusal.If the provider refuses to give you the identifying information,you should report whatever information you have (such as the name andaddress) on the form you use to claim the credit. Write "See Page 2"in the columns calling for the information you do not have. On thebottom of page 2, explain that you requested the information from thecare provider, but the provider did not give you the information. Thisstatement will show that you used due diligence in trying to furnishthe necessary information.