Child and Dependent Care Credit
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New Member

Child and Dependent Care Credit

According to IRS Publication 503, you can take the Child and Dependent Care Credit 'so you (and your spouse if filing jointly) can work or look for work.' My wife and I are filing jointly and in 2018 one of us worked full time while the other was actively looking for work. We enrolled our 2 year old in pre-k and had a nanny watch him several times a week when neither of us were home to watch him. We incurred this child care expense while one of us was working full time and the other was actively seeking work. Our dynamic seems to be precisely aligned with the spirit of this credit, especially with one parent actively seeking work due to a loss of previous income. We seem like the archetype for those who could really use this credit. Just because one of us didn't show earned income in 2018, we cannot take this credit? We meet all the other criteria. To me, it seems that the spirit of this publication was drafted to reflect if one parent is a homemaker than they should be home as the care provider, and therefore, unable to take this child care expense credit. That would make sense, but that was not the case in our household.

Any advice on how to handle would be sincerely appreciated! How can we prove this?

4 Replies
Level 9

Child and Dependent Care Credit

Unfortunately, if one of the spouses does not have earned income, or is a student or disabled, the credit for child and dependent care expenses is not allowed.  I understand your frustration, but that's the way the law is written.

Level 15

Child and Dependent Care Credit

You can be actively seeking work, but must end up with a job during that tax year.
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New Member

Child and Dependent Care Credit

Thanks for the quick reply, Zbucklyo. What is technically considered "earned income"?  As a test, if I check the box for a full time student, I get the full child care credit (again this was a test as neither of us are students). However, would selling a few items over the internet be considered "earned income" for my wife and thus allow us to take advantage of this child care credit? In other words, would earning for arguments sake under $100 from selling items or doing freelance work for cash be considered "earned income" and thus kick in this full child care credit? Does at least $1 of earned income from each spouse kick in this credit?  This makes a considerable difference on our return that is why I am inquiring ! Thanks!!
Level 9

Child and Dependent Care Credit

Well, it sounds like you weren't planning on reporting that income until you found out the child and dependent care credit would not be allowed.  So, I have nothing further to add.  People figure out lots of way to work the tax laws to their advantage.  
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