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The amount of child care expenses you can take (or have on your W-2) is limited to the lower of your (or your spouse's, if applicable) earned income.

Per IRS Publication 503 Child and Dependent Care Expenses:

Page 11: Earned Income Limit.

The amount of work-related expenses you use to figure your credit can't be more than:

  1. Your earned income for the year, if you are single at the end of the year, or
  2. The smaller of your or your spouse’s earned income for the year, if you are married at the end of the year.

Page 4: Rule for student-spouse or spouse not able to care for self. Your spouse 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 himself or herself. (Your spouse also must live with you for more than half the year.)

Page 11: You or your spouse is a student or not able to care for self. Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more.

Spouse works. If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month.

Spouse qualifies for part of month. If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month.

You are a student or not able to care for yourself. These rules also apply if you are a student or not able to care for yourself and are filing a joint return. For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month.

Both spouses qualify. If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month.

To enter the amounts in the TaxAct Program, which will transfer to Lines 4 and/or 5 of Form 2441 follow the steps below (if there are also care expenses to be entered for the care of the disabled spouse, first follow the steps at the end of this email):

  1. From within your TaxAct return (Online or Desktop), click Federal.  On smaller devices, click the menu icon in the upper left-hand corner, then select Federal 
  2. Click Child and Dependent Care in the Federal Quick Q&A Topics menu
  3. Click No to review the care provider information (If you have not entered provider information, click Yes and enter the information)
  4. Click Continue and then click Yes to enter the income adjustment for a disabled taxpayer or spouse (this screen is only available if one of the spouses does not have income on the return).  Click the information icon on the screen for details on the amount to enter.  An amount must be entered for the disabled spouse or per the IRS instructions, the credit will not calculate.
  5. Click Continue to the screen to enter or review the dependent entries.  The spouse should be listed here if the steps below have been completed so you can enter the expense amount.
  6. Click Continue until you reach the summary screen to review the results of the entries.

If you have expenses to claim on Form 2441 for a disabled spouse you would enter them as a nondependent qualifying person for EIC and/or dependent care credit in the dependent section of the return so you are able to enter qualifying expenses for them: 

  1. From within your TaxAct return (Online or Desktop) click Federal. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal.
  2. Click Basic Information in the Federal Quick Q&A Topics menu to expand the category, and then click Dependents and other qualifying persons
  3. Click Add to create a new dependent entry or click Review to review a dependent already entered 
  4. On the first screen, enter/review the spouse's information, then click Continue
  5. On the following screen, select Nondependent qualifying person for EIC and/or dependent care credit from the Dependent Type: drop-down menu and enter the number of months that they lived with you, then click Continue to save the changes.

This will NOT list them as a dependent on the tax return however allows entry in the Child and Dependent Care section of the program. Note the spouse must also have the disabled box checked in the Basic Info section (or on page 1 of Form 1040) in order to be eligible to claim expenses for them on Form 2441 along with the disabled box in the dependent section.


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