Can you claim child care credit if you receive child care grant from university?

[martymcflyfan]

Hi, we received a child care grant from our university to pay for childcare while we are at school. We were told that the child care grant is taxable income and that we will receive tax forms. Since we have to claim this money as income, can we claim the child care credit for the purpose of full time students and not work since we did use the money for child care? If not, would we just subtract our child care costs from the grant and claim that amount as income? Thanks

[martymcflyfan]

Thanks for your reply. I just received the 1098-t and the child grant is included on there. I just want to clarify, as long as my spouse earned income in 2015, then we can claim the child care credit? We are both full-time students, she works but I do not. Thanks again.

[ChelsiE2]

That's correct.  The credit will be limited based on how much "earned income" your spouse has.  The best way to figure your tax is to input all the details in TurboTax.  We'll do the calculation for you.

[ChelsiE2 · Accepted solution]

You report the child care grant money as income as the University stated.  You must report the full amount that is shown on the tax forms that they send you.

Because the grant is taxable to you, yes you can use it to claim the Child and Dependent Care Credit.  However, another requirement to claim the Child and Dependent Care Credit is that either you or your spouse will need earned income.  This credit allows for one of you to be exempt from the earned income requirement if you are a full time student but not both of you.

To see more information about the Child and Dependent Care Credit: 

https://ttlc.intuit.com/replies/3301418