rom 2441

Department of the Treasury
Internal Revenue Service

Credit for Child and Dependent Care Expenses

b> Attach to Form 1040. > See Instructions below.

1979

Name(s) as shown on Form 1040

Your social security number

1 See the definition for ‘qualifying person” in the instructions. Then read the instructions for line 1.

(@) Name of qualifying person

(b) Date of birth

(©) Relationship

(d) During 1979, the person
lived with you for:

Months Days

2 Persons or organizations who cared for those listed on line 1. See the instructions for line 2.

(a) Name and address
(if more space is needed,
attach schedule)

(b) Social security num-

(c) Relationship,
ber, if applicable ifany

From To
Month—Day | Month—Day

(d) Period of care (e) Amount of 1979 ex-
penses (include those

not paid during the year)

To Figure Your Credit, You MUST Complete ALL Lines That Apply

3 Add the amounts in column 2(e) .

4 Enter $2,000 ($4,000 if you listed two or more names in line Do or amount on line 3, whichever k is less

5 Earned income (wages, salaries, tips, etc.). See the instructions for line 5. An entry MUST be made on this line.

(a) If unmarried at end of 1979, enter yourearned income. . . .... .

(b) If married at end of 1979, enter your earned income or your spouse’s whichever is less .

6 Enter the amount on line 4 or line 5, whicheverisless. . . . . woe
7 Amount on line 6 paid during 1979. An entry MUST be made on this line . oe
8 Child and dependent care expenses for 1978 paid in 1979. See instructions for line 8 .

9 Add amounts on lines 7 and8. . .
10 Multiply line9 by 20 percent. . . .
11 Limitation:

a Enter tax from Form 1040, line 37 .

_ 7 us

b Enter total of lines 38, 39, and 41 through 43 of Form ‘io4o .
¢ Subtract line 11b from line 11a (if line 11b is more than line 11a, enter zero) .

12 Credit for child and dependent care expenses. Enter the smaller of line 10 or line 11c here and on Form 1040, line 40.

HTT

13 If payments listed on line 2 were made to an individual, complete the following:

(a) If you paid $50 or more in a calendar quarter to an individual, were the services performed in yourhome?. . . . . . .
(b) If “Yes,” have you filed appropriate wage tax returns on wages for services in your home (see instructions for line 13)?

(c)_If answer to (b) is “Yes,”" enter your employer identification number .

No

>|

General Instructions

What is the Child and Dependent Care
Expenses Credit?—This is a credit you can
take against your tax if you paid someone
to care for your child or dependent so that
you could work or look for work. You can
also take the credit if you paid someone to
care for your spouse. The instructions that
follow list tests that must be met to take
the credit. If you need more information,
please get Publication 503, Child and Dis-
abled Dependent Care.

For purposes of this credit, we have de-
fined some of the terms used here. Refer
to these when you read the instructions.

Definitions
A qualifying person can be:

@ Any person under age 15 whom you
list as a dependent. (If you are divorced,
legally separated, or separated under a
written agreement, please see the Child
Custody Test in the instructions.)

Your spouse who is mentally or physi-
cally not able to care for himself or herself.

© Any person not able to care for him-
self or herself whom you can list as a de-
pendent, or could list as a dependent ex-
cept that he or she had income of $1,000
or more.

A relative is your child, stepchild,
mother, father, grandparent, brother, sis-
ter, grandchild, uncle, aunt, nephew, niece,
stepmother, stepfather, stepbrother, step-
sister, mother-in-law, father-in-law, brother-
in-law, sister-in-law, son-in-law, and daugh-
ter-in-law. A cousin is not a relative.

A full-time student is one who was en-
rolled in a school for the number of hours
or classes that is considered full time. The
student must have been enrolled at least 5
months during 1979.

What Are Child and Dependent Care
Expenses?

These expenses are the amounts you
Paid for household services and care of the
qualifying person.

Household Services.—These are serv-
ices performed by a cook, housekeeper,
governess, maid, cleaning person, baby-

sitter, etc. The services must have been
needed to care for the qualifying person as
well as run the home. For example, if you
paid for the services of a maid or a cook,
the services must have also been for the
benefit of the qualifying person.

Care of the Qualifying Person.—Care in-
cludes cost of services for the well-being
and protection of the qualifying person.

Care does not include expenses for food
and clothes. If you paid for care that in-
cluded these items and you cannot sepa-
rate their cost, take the total payment.

Example: You paid a nursery school to
care for your child and the school gave the
child lunch. Since you cannot separate the
cost of the lunch from the cost of the care,
you can take all of the amount that you
paid to the school.

This example would not apply if you had
school costs for a child in the first grade or
above because these costs cannot be
counted in figuring the credit.

You can count care provided outside
your home if the care was for your depend-
ent under age 15.

(Continued on back)
283-154-1


You can claim medical expenses you
paid for the qualifying person if you paid
them so you could work. If you itemized
deductions, you may want to take all or
part of these expenses on Schedule A, For
example, if you can’t take all of the medical
expenses on Form 2441 because your
costs for care have reached the limit
($2,000 or $4,000), you can take the rest
of the medical expenses on Schedule A. If
you show all of the medical expenses on
Schedule A, you cannot take on Form 2441
that part you could not deduct on Schedule
A because of the 3-percent limit.

To Take This Credit—yYou must file
Form 1040, not Form 1040A, and you must
meet all of the tests listed below.

(1) You paid for child and dependent
care so you (and your spouse if you were
married) could work or look for work.

(2) One or more qualifying persons lived
in your home.

(3) You (and your spouse if you were
married) paid more than half the cost of
keeping up your home. This cost includes
rent or mortgage payments; utility
charges; maintenance and repairs; prop-
erty taxes and property insurance; and
food costs (but not dining out).

(4) You must file a joint return if you
were married. There are two exceptions to
this rule. You can file a separate return if:

(a) You were legally separated; or
(b) You were living apart and:

@ The qualifying person lived in your
home for more than 6 months; and

You paid more than half the cost of
keeping up your home; and

e Your spouse did not live in your home
during the last 6 months of your tax year.

(5) You paid someone, other than your
spouse or a person for whom you could
claim a dependency exemption, to care for
the qualifying person.

You are allowed to pay a relative, includ-
ing a grandparent, who was not your de-
pendent. If the relative is your child, he or
she must also have been 19 or over by the
end of the year.

Child Custody Test.—If you were di-
vorced, legally separated, or separated
under a written agreement, your child is a
qualifying person if you had custody for
the longer period during 1979. The child
must also have:

@ Received over half of his or her sup-
port from the parents, and

© Been in the custody of one or both
parents for more than half of 1979, and

e Been under 15, or physically or men-
tally unable to care for himself or herself.

Credit Limit.—The credit is generally
20% of the amount you paid someone to
care for the qualifying person. The most
you can figure the credit on is $2,000 a
year for one qualifying person ($4,000 for
two or more).

Line-by-Line Instructions

Line 1.—In column (a) list the name of
each qualifying person who was cared for
during 1979 so you could work. In column
(b) show the date of birth of each person.
In column (c) show that person’s relation-
ship to you (for example: son or daughter),
In column (d) show the number of months

and days each person lived in your home
during 1979, Count only the times when
the person was qualified.

Line 2.—in column (a) show the name
and address of the person or organization
who cared for each qualifying person. If
you listed a person who was your employee
and who provided the care in your home,
then in column (b) enter that person’s so-
cial security number. Leave column (b)
blank if the person: was not your em-
ployee; was self-employed; was an em-
ployee of an organization or a partnership;
or did not provide the care in your home.

In column (c) write none if the person
who provided the care was not related to
you. If the care was provided by a relative,
show the relationship to you. See defini-
tion of relative on the front of the form.

In column (d) show the period of time
each person or organization provided care.

In column (e) list amounts you paid or
still owe for care provided in 1979.

Line 3.—Add the amounts in column
2(e) and enter the total.

Line 4.—Enter $2,000 ($4,000 if more
than one person is listed on line 1) or the
amount on line 3, whichever is less.

Line 5.—This line is used to figure your
earned income. Generally, you can figure
earned income using steps (a) through (e).
If you are unmarried, enter your amounts
from Form 1040 when they are needed for
the steps below. If you are married, each
spouse's earned income will have to be fig-
ured separately.

(a) Enter one spouse’s
income from Form
1040, line8. . .
Enter the same
spouse’s net profit
from Schedule C or
Schedule F (Form
1040)

(b)

Add the amounts
from (a) and (b) .
Enter the same
spouse’s portion of
income exclusion
(spouse’s Portion of
Form 1040, line 29)
Subtract (d) from
(c). This is one
spouse’s earned in-
come. . . . e

(c)
(da)

(e)

&

If you are unmarried, enter the amount
from (e) on line 5. If you are married, go
back and figure the other spouse’s earned
income using steps (a) through (e). Decide
which spouse had the lower earned income.
Enter that amount on line 5.

If your spouse was a full-time student or
not able to care for himself or herself, use
the greater of your spouse's monthly
earned income or $166 ($333 if you listed
two qualifying persons on line 1(a)) to de-
termine his or her total income for the year.

If, in the same month, both you and your
spouse were full-time students and did not
work, you cannot use any amount paid that
month to figure the credit. The same ap-
plies to a couple who did not work because
neither was capable of self-care.

Line 6.—Enter the amount from line 4
or line 5, whichever is smaller.

Line 7.—How much of the amount on
line 6 did you pay in 1979? Enter this

‘x US, GOVERNMENT PRINTING OFFICE : 1979-O-283-154

amount on line 7. Do not list any amounts
for 1979 that you did not pay until 1980.

Line 8.—If you had child and dependent
care expenses for 1978 that you did not
pay until 1979, add them and enter the
total on this line. Be sure the total is not
over your 1978 limit. Attach a sheet similar
to the example below, showing how you fig-
ured the amount you are carrying over to

Example: In 1978 you had child care ex-
penses of $2,100 for your 12-year-old son.
For one child, you were limited to $2,000.
Of the $2,100, you paid $1,800 in 1978
and $300 in 1979. Your spouse’s earned
income of $5,000 was less than your
earned income. You would be allowed to
figure a credit on $200 in 1979, as follows:

(1) 1978 child care expenses paid in 1978 . $1,800
300

(2) 1978 child care expenses paid in 1979 .
@) Total. 2 2. ee ee ee
4) Limit for one qualifying person .

(5) Earned income reported in 1978

(6) Smaller of line 3, 4, or 5.

(7) Subtract child care expenses on which
credit was figured in 1978... .

(8) 1978 child care expenses carried over
for credit this year (1979). . . + $200

Line 9.—Add lines 7 and 8 and enter the
total on line 9.

Line 10.—Multiply the amount on line 9
by 20% and enter the result on line 10.

Line 11.—Your credit for child and de-
pendent care expenses cannot be more
than your tax after subtracting certain cred-
its. To figure the allowable credit, enter
your tax from Form 1040, line 37, on line
ila. Add the amounts, if any, you entered
on Form 1040, lines 38, 39, and 41 through
43. Enter the total of these lines on line
11b. Subtract line 11b from 11a and enter
the difference on line 11c. If line 11b is
more than line 11a, enter zero on line 11c.

Line 12.—Enter the smaller of line 10 or
1l1c on this line and Form 1040, line 40.
This is your credit for child and dependent
care expenses.

Line 13.—On line 13(a), check the yes
box if you paid cash wages to an employee
for household services. Check the no box
if you did not. In general, if you paid cash
wages of $50 or more in a calendar quarter
for household services to a person such as
a cook, housekeeper, governess, maid,
cleaning person, babysitter, etc., you must
file an employment tax return. If you are
not sure whether you should file an em-
ployment tax return, ask the Internal Reve-
nue Service or get Form 942, Employer's
Quarterly Tax Return for Household Em-
ployees. Note: If you paid $1,000 or more
for household services in any calendar
quarter in 1978 or 1979, you should file
Form 940, Employer's Annual Federal Un-
employment Tax Return, for 1979 by Janu-
ary 31, 1980.

On line 13(b), check the yes box if you
have filed Form 942, Employer's Quarterly
Tax Return for Household Employees.
Check the no box if you have not,

On line 13(c), enter your employer iden-
tification number. If you do not have a
number, and are required to file Form 942,
file the form and enter ‘“‘none”’ in the space
for ‘Employer identification number.”

283-154-2