Why don't I qualify for the Child and Dependent Care Credit when we had $7500 in daycare expenses? It says I qualify for 20% of $0.

[Rachel_W]

Did either of you have an amount in Box 10 of your Form W2?

[VolvoGirl]

Do you both have earned income from W2 or a Net Profit on Schedule C?  A loss won't count.

[stephanie4]

No, neither of us have an amount in Box 10. And I have earned income for the year but my husband does not.

[Rachel_W · Accepted solution]

If you are married and living with your spouse, you both must have earned income in order to claim the Child and Dependent Care Credit.  

However, there are exceptions for a disabled spouse or one who is a full-time student at least five months of the year. If you meet either of those exceptions, the IRS assigns the following amounts as income to that spouse for purposes of the credit:

• $250 per month for one child
• $500 per month for two or more children

If you don't qualify for one of these exceptions, then you cannot take the Child and Dependent Care Credit.

For more information, please check out  IRS Pub 503.

[Edited 03.08.2019 6:30PM]

[stephanie4]

What if my husband was looking for a job and DID procure a job, it just didn't start until Jan. 1?

[Rachel_W]

Revisit the "Child and Dependent Care Credit" section and if there is no income reported for your husband, one of the interview questions should ask you about that.  [Edited 3.08.2019|6:30PM]

[stephanie4]

It does not ask about that.  It asks if he was a full-time student (no) or if he was disabled (no), but there is no question about searching for a job.

[Rachel_W]

I'm sorry, I interpreted the rule incorrectly.  The reason the question is not popping up is because he would have had to find work during the year. (See screenshot above)