1. The care must
have been provided for one or more qualifying persons. A qualifying person is
your dependent child age 12 or younger when the care was provided.
Additionally, your spouse and certain other individuals who are physically or
mentally incapable of self-care may also be qualifying persons. You must
identify each qualifying person on your tax return.
2. The care must
have been provided so you – and your spouse if you are married filing jointly –
could work or look for work.
3. You – and your
spouse if you file jointly – must have earned income from wages, salaries, tips,
and other taxable employee compensation or net earnings from self-employment.
One spouse may be considered as having earned income if they were a full-time
student or were physically or mentally unable to care for themselves.
4. The payments
for care cannot be paid to your spouse, to the parent of your qualifying person;
to someone you can claim as your dependent on your return, or to your child who
will not be age 19 or older by the end of the year even if he or she is not
your dependent. You must identify the care provider(s) on your tax return.
5. Your filing
status must be single, married filing jointly, head of household or qualifying
widow(er) with a dependent child.
6. The qualifying
person must have lived with you for more than half of 2011. There are
exceptions for the birth or death of a qualifying person, or a child of
divorced or separated parents. See Publication 503, Child and Dependent Care
Expenses.
7. The credit can
be up to 35 percent of your qualifying expenses, depending upon your adjusted
gross income.
8. For 2011, you
may use up to $3,000 of expenses paid in a year for one qualifying individual
or $6,000 for two or more qualifying individuals to figure the credit.
9. The qualifying
expenses must be reduced by the amount of any dependent care benefits provided
by your employer that you deduct or exclude from your income, such as a
flexible spending account for daycare expenses.
10. If you pay
someone to come to your home and care for your dependent or spouse, you may be
a household employer and may have to withhold and pay Social Security and
Medicare tax and pay federal unemployment tax. See Publication 926, Household
Employer's Tax Guide.
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