My grandfather kept my child in 2021 while I worked. He is now deceased, how can I claim the child and dependent care credit?

[Opus 17]

You can't.  If you did not have actual physical custody of your child more than half the nights of the year, you can't claim the child and dependent care credit.

You are also not eligible for the Child Tax Credit, because you can't claim your child as a qualifying child dependent if they did not live with you more than half the year.  You can claim them as an "other" dependent for the $500 credit, but only if you paid more than half the child's financial support.

The only person who can claim your child as a dependent is your grandfather, if he had custody more than half the nights of the year.  Even though he is passed on, someone will have to file a 2021 tax return for him (usually the administrator or executor of his estate) for any income he received in 2021, and that tax return will include your child as a dependent.  

There are some special rules for sharing the tax benefits of a child, but they only apply when the child is in the custody of parents who are divorced or separated and living apart. Those rules can't be used to allow you to claim the child because the person who claimed the child instead of you was a blood relative of the child (their great-grandparent.)

[qresciar26]

Not sure if you read that correct. I said he kept my child while I worked. I have full custody of my child. I said CHILD DEPENDENT CARE CREDIT meaning child care...thank you for your input though. 

[DanaB27 · Accepted solution]

Yes, if you paid your grandfather to watch your child then you will be able to claim Child and Dependent Care Credit if you met all the qualifications. You have to enter your grandfather's information in the childcare provider section.

The person filing the last tax return for your grandfather will have to include the payments as taxable income on your grandfather's last return.

Please follow these steps to enter your child care:

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type “child care”
3. Click on “Jump to child care”

My deepest sympathies for the loss of your grandfather. 

[Opus 17]

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@qresciar26 wrote:

Not sure if you read that correct. I said he kept my child while I worked. I have full custody of my child. I said CHILD DEPENDENT CARE CREDIT meaning child care...thank you for your input though. 

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Yes, I misunderstood the question.

If you paid your grandfather in your home, he is your household employee and you must issue him a W-2, even though he passed away.  Whether or not it will be taxable will depend on his overall tax situation and his executor will take care of it.

If you paid him for care in his home, you don't need to issue any tax paperwork, you just need his SSN to claim the credit.  As before, whether or not it will be taxable will depend on his overall tax situation and his executor will take care of it.

The IRS will not deny the credit just because the caregiver passed away.