@jason_y_natalia wrote:
I thought the IRS states that the unemployed can be "looking for work" to be eligible for the DCFSA? Does it actually require them to have income during the year? If so, how much?
Unemployed is not "looking for work" unless you are actually actively looking for work. However, that only makes the expenses qualified for the credit. The dollar amount of the credit is still limited by your actual wages.
Suppose you paid $500 per month for care, but for 10 months you were not working or looking for work. Only 2 months of your expenses are qualified, and you should only enter $1000 as your qualified expenses. But, if you were looking for work for those 10 months, you can enter the full $6000 as your qualified expenses.
But then when it comes to calculating the credit, it will be based on whichever is less, your qualified expenses or your actual wages. If you looked for work for 10 months and worked for 2 months and your wages were $4000, that's the maximum qualifying expenses even though the care itself was qualified for the whole year. Or, if you were unemployed all year, you won't get any credit because even though your expenses are qualified because you were looking for work, your qualifying expenses can't be more than your actual wages from working.
