Business & farm

If you paid someone to care for your child or other qualifying person so you (and your spouse if filing jointly) could work or look for work, you may be able to take the credit for child and dependent care expenses.

In your situation, you indicted that your spouse does not have earned income for the year, as such, you will not qualify for this credit. Even if your spouse had some W2 wage income, know that a net loss from self-employment reduces earned income.

There is a special rule for a taxpayer (or spouse) student or a taxpayer or spouse not able to care for themselves. If this situation applies, the person is treated as having earned income for any month that he or she is:
1. A full-time student, or
2. Physically or mentally not able to care for themselves.

Specific rules for these exceptions can be found in IRS Publication 503, starting on page 6, as found here:  IRS Publication 503 

So, if your spouse does not work at all (Form W2 wages or self-employment income) in 2024, is not a full -time student or is not able to care for themselves, then you will not be able to take this credit on your tax return.

Unfortunately, the same concept applies to Dependent care FSA accounts - the amount you put into the dependent care benefit account that is excluded from income is limited to the smallest of:

• The total amount of dependent care benefits you received during the year,
• The total amount of qualified expenses you incurred during the year,
• Your earned income,
• Your spouse's earned income, or
• The maximum amount allowed under your dependent care plan. For 2023, the maximum amount that can be excluded from an employee's income through a dependent care assistance program is $5,000 ($2,500 if married filing separately).

So, in your situation, if your spouse has no earned income, then any amounts you set aside in a dependent care account will still be taxable on your tax return.