Prior to the 2009 tax year (to be filed by April 15, 2010), people using the 1040A to file their personal income tax returns had the option of using supplementary Schedule 2, if they wanted to claim credit for child or dependent expenses. As of the 2009 tax year, Schedule 2 has been done away with and replaced by a new form: the Form 2441. Once the new form is completed, the resulting amount can be subtracted from the taxpayer’s income as reported on the 1040 or 1040A, specifically on line seven of both 1040 forms. People filing amended for periods before Schedule 2 were replaced should continue to use Schedule 2 for their amendments.

Basically these tax credits are limited to qualifying persons: (a) dependent children under the age of thirteen years old; (b) a disabled spouse who was unable to take care of themselves; (c) or, any other disabled person that the filer could claim as a dependent. People with qualifying dependents are able to claim some of the expenses they incurred over the year for their care while the filer was working or looking for work. The expenses must also be qualifying and do not include all related expenses. For example, child support or services that were provided by – or paid for – by other government agencies, either federal or state. In all, the exact rules of what can be claimed are complicated and the Internal Revenue Service (IRS) has issues a special publication addressing the question in detail: IRS Publication 503.

In order to file form 2441 and claim these expenses against annual income, the filer must meet a number of minimum requirements. The filer must (a) be claiming the child or disabled person as a dependent on their tax return; (b) the filer has to have earned income for the amounts to be claimed against, a person that did not earn any income – for example, someone looking for a job but not finding one – cannot claim the credit reported on form 2441; (c) the care claimed has to have been directly for the qualifying dependent; (d) the care provider cannot be the filer’s spouse or someone the filer could claim as a dependent (regardless of whether they do so or not); and (e) the filer must be able to adequately document both the qualifying person and the qualifying care as meeting the requirements of the credit.

This entry was posted on Thursday, February 11th, 2010 at 8:15 am and is filed under Sponsor. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.