om 2441

Department of the Treasury
Internal Revenue Service (0)

Credit for Child and Dependent Care Expenses

P Attach to Form 1040.
P See instructions below.

OMB No. 1545-0068

1987

Attachment
Sequence No.23

Name(s) as shown on Form 1040 Your social security number
Note: /f you paid cash wages of $50 or more in a calendar quarter to an individual for services performed in your home,
you must file an employment tax return. Get Form 942 for details.
1 Enter number of qualifying persons who were cared for in 1987. (See instructions for definition of qualifying persons.) > | 1
2 Enter the amount of qualified expenses you incurred and actually paid in 1987 for the care of the
qualifying person. (See What Are Qualified Expenses in the instructions.) Do not enter more than
$2,400 ($4,800 if you paid for the care of two or more qualifying persons) Loe . L2
3a You must enter your earned income on line 3a. See line 3 instructions for definition of earned income 3a
b If you are married, filing a joint return for 1987, you must enter your spouse’s earned income on line
3b. (If spouse is a full-time student or is disabled, see the line 3 instructions for amount to enter.) 3b
c If you are married filing a joint return, compare the amounts on lines 3a and 3b, and enter the
‘smaller of the two amounts on line 3c . . 3c
4 elf you were unmarried at the end of 1987, compare 2 the amounts 0 on lines 2 ‘and 3a,
and enter the smaller of the two amounts on line 4. 4
e If you are married filing a joint return, compare the amounts on lines 2 and 3c, and
enter the smaller of the two amounts on line 4.
5 Enter percentage from table below that applies to the adjusted gross income on Form 1040, line 31. 5 x.
If line 31 is: Percentage is: If line 31 is: Percentage is:
Over— But not Over— But not
over— over—
$0-10,000 30% (.30) $20,000-22,000 24% (.24)
10,000-12,000 29% (.29) 22,000-24,000 23% (.23)
12,000-14,000 28% (.28) 24,000-26,000 22% (.22)
14;000-16,000 27% (.27) 26,000-28,000 21% (.21)
16,000-18,000 26% (.26) 28,000 20% (.20)
18,000-20,000 25% (25)
6 Multiply the amount on line 4 by the percentage shown on line 5, and enter the result - Lg
7 Multiply any child and dependent care expenses for 1986 that you paid in 1987 by the percentage that
applies to the adjusted gross income on your 1986 Form 1040, line 33, or Form 1040A, line 15. Enter
the result. (See line 7 instructions for the required statement.) . : vA
8 Add amounts on lines 6 and 7. See the worksheet in the instructions for line 8 forthe amount of credit.
you can claim . _ : . 8

General Instructions

Paperwork Reduction Act Notice.—We
ask for this information to carry out the
Internal Revenue laws of the United States.
We need it to ensure that taxpayers are
complying with these laws and to allow us
to figure and collect the right amount of
tax. You are required to give us this
information.

What Is the Child and Dependent
Care Expenses Credit?

You may be able to take a tax credit for
amounts you paid someone to care for your
child or other qualifying person so you could
work or look for work in 1987. The most the
credit may be is $720 for the care of one
qualifying person, or $1,440 for the care of
two or more qualifying persons.

Additional information.—For more
details, please get Publication 503, Child
and Dependent Care Credit, and
Employment Taxes for Household
Employers.

Who Is a Qualifying Person?

A qualifying person is:

e Any person under age 15 whom you claim
as a dependent (but see the rule for Children
of divorced or separated parents).

Your disabled spouse who is mentally or
physically unable to care for himself or herself.
e Any disabled person who is mentally or
physically unable to care for himself or
herself and whom you claim as a dependent,
or could claim as a dependent except that he
or she had income of $1,900 or more.
Note: You must have shared the same
home with any person you claim as a
qualifying person.
Children of divorced or separated
parents.—If you were divorced, legally
separated, or lived apart from your spouse
during the last 6 months of 1987, you may
be able to claim the credit even if your child
is not your dependent. If your child is not
your dependent, he or she is a qualifying
person if all five of the following apply:
1. You had custody of the child for the
longer period during the year; and
2. The child received over half of his or her
support from one or both of the parents; and
3. The child was in the custody of one or
both of the parents over half of the year; and
4. The child was under age 15, or was
physically or mentally unable to care for
himself or herself; and
5. The child is not your dependent because—
a. As the custodial parent, you have signed
Form 8332, Release of Claim to Exemption

for Child of Divorced or Separated Parents,

ora similar statement, agreeing not to claim
the child’s exemption for 1987; or

b. You were divorced or separated before
1985 and your divorce decree or written
agreement states that the other parent can
claim the child's exemption, and the other
parent provides at least $600 in child
support during the year. Note: This rule does
not apply if your decree or agreement was
changed after 1984 to specify that the other
parent cannot claim the child’s exemption.

Who May Take the Credit?

To claim the credit, all five of the following
must apply:

1. You paid for the care so you (and your
spouse if you were married) could work or
look for work (but see the rules at the line 3
instructions for Spouse who is a full-time
student or is disabled).

2. You and the qualifying person(s) lived in
the same home.

3. You (and your spouse if you were
married) paid over half the cost of keeping
up your home. The cost includes: rent;
mortgage interest; property taxes; utilities;
home repairs; and food eaten at home.

(Continued on back)

Form 2441 (1987)


Form 2441 (1987)

Page 2

4. The person you paid to provide the care
was not your spouse or a person you could
claim as a dependent.
Note: /f the person you paid to provide the
care was your child, he or she must have
been 19 or over by the end of 1987.
5. If you were married at the end of 1987,
generally, you must file a joint tax return.
However, there are two exceptions to this
rule. You will be treated as unmarried and
still be eligible to take the credit if:

a. You were legally separated; or

b. You were living apart from your spouse
during the last 6 months of the year, and
the qualifying person lived with you in your
home over 6 months, and you provided over
half the cost of keeping up your home.

What Are Qualified Expenses?

Qualified expenses include amounts paid for
household services and care of the qualifying
person while you work or look for work.
Household services.—These services
must be needed to care for the qualifying
person as well as to run the home. They
include, for example, the services of a cook,
maid, babysitter, housekeeper, or cleaning
person if the services were partly for the
care of the qualifying person. Do not include
services of a chauffeur or gardener.
Note: /f you paid cash wages of $1,000 or
more for household services in any calendar
quarter in 1986 or 1987, you should file a
Form 940 for 1987 by February 1, 1988.
Care of the qualifying person.—Care
includes the cost of services for the
qualifying person's well-being and
protection. It does not include the cost of
clothing or entertainment

Generally, care does not include food or
schooling expenses. However, if these items
are included as part of the total care, and
they are incident to, and cannot be
separated from, the total cost, you may
count the total payment. However, you may
not count the cost of schooling for a child in
the first grade or above.
Care outside the home.—You may count
care provided outside your home if the care
was for your dependent under age 15, or *
any other qualifying person who regularly
spends at least 8 hours a day in your home.
Medical expenses.—Some dependent
care expenses may qualify as medical
expenses. If you itemize deductions, you
may want to take all or part of these
medical expenses on Schedule A (Form
1040). If you cannot use all the medical
expenses on Form 2441 because of the
dollar limit or earned income limit
(explained later), you may take the rest of
these expenses on Schedule A. But if you
deduct the medical expenses first on
Schedule A, you may not use any part of
these expenses on Form 2441.

Specific Instructions

Line 2. Dollar limit.—On line 2, enter the
amount of qualified child and dependent
care expenses you incurred and actually
paid in 1987. However, the most you may
figure the credit on is $2,400 a year for one
qualifying person, or $4,800 a year for two
or more qualifying persons. Do not include
amounts paid or incurred by your employer
if, and to the extent, such amounts are
excluded from your gross income.

Note: Do not include on line 2 qualified
expenses that you incurred in 1987 but did
not pay until 1988. Instead, you may be
able to increase your 1988 credit when you
pay the 1987 expenses in 1988.

Line 3. Earned income limit.—The amount
of your qualified expenses may not be more
than your earned income or, if married filing
a joint return, the smaller of your earned
income or your spouse’s earned income.

In general, earned income is wages,
salaries, tips, and other employee
compensation. It also includes net earnings
from self-employment. This is usually the
amount shown on Schedule SE (Form
1040), line 9.

Unmarried taxpayers.—If you were
unmarried at the end of 1987 or are treated
as being unmarried at the end of the year,
enter your earned income on line 3a.
Married taxpayers.—If you are married,
filing a joint return, figure each spouse’s
earned income separately and disregard
community property laws. Enter your
earned income on line 3a and your spouse’s
earned income on line 3b. Then, enter the
smaller of the two incomes on line 3c. If
your spouse died in 1987, had no earned
income, and you file a joint return for 1987,
see Publication 503.

Spouse who is a full-time student or is
disabled.—If your spouse was a full-time
student or was mentally or physically unable
to care for himself or herself, figure your
spouse's earned income on a monthly basis
to determine your spouse’s earned income
for the year. For each month that your
spouse was disabled or a full-time student,
your spouse is considered to have earned
income of not less than $200 a month
($400 a month if more than one qualifying
person was cared for in 1987).

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

A full-time student is one who was
enrolled in a school for the number of hours.
or classes that the school considers full
time. The student must have been enrolled
at least 5 months during 1987.
Self-employment income.—You must
reduce your earned income: by any loss
from self-employment. If your net earnings
from self-employment are less than
$1,600, and you use the optional method
to figure your self-employment tax, you
may be able to increase your net earnings
to $1,600 for this credit. Get Publication
533, Self-Employment Tax, for details. If
you only have a loss from self-employment,
or your loss is more than your other earned
income and you do not use the optional
method, you may not take the credit.

Line 7.—If you had qualified expenses for
1986 that you did not pay until 1987, you
may be able to increase the amount of
credit you may take in 1987. To do this,
multiply the 1986 expenses you paid in
1987 by the percentage from the table on
line 6 that applies to the adjusted gross
income shown on your 1986 Form 1040,
line 33, or Form 1040A, line 15. Your 1986
expenses must be within the 1986 limits.
Attach a computation showing how you
figured the increase.

Line 8.—In certain cases, the amount of
credit you figured on line 8 may be limited.
Some taxpayers will need to complete Form
6251, Alternative Minimum Tax—
Individuals, because the computation of
this limit uses an amount from line 15 of
that form. Other taxpayers, however, will
not be affected by the limit and will not
need Form 6251. The following will help
you determine if you need Form 6251.

First, complete line 1 of the worksheet
below.

Get Form 6251 if:

@ You filed Schedule C, D, E, or F (Form
1040); OR

‘© The amount you enter on line 1 of the
worksheet below is more than: $112,500
for single or head of household; $150,000
for married filing jointly; or $75,000 for
married filing separately.

If either of the above applies to you,
complete Form 6251 through line 15. Skip
lines 2 through 6 of the worksheet and go
directly to line A of the worksheet.

If neither of the above applies to you,
continue with line 2 of the worksheet. You
may still need to get Form 6251.

1. Enter the amount from Form

1040, line 22.

(Add to line 1 any tax exempt

interest from private activity

bonds issued after August 7,

1986, and any net operating loss

deduction.)

2. Enter: $30,000 if single or head

of household; $40,000 if married

filing joint or $20,000 if

married filing separately |. . _
3. Subtract line 2 from line 1. If the

result is zero or less, STOP

HERE. Enter on Form 1040, line

40, the amount of your credit

shown on line 8 of Form 2441.

Otherwise, go on to line 4 .

4. Enter the amount from Form

1040, line 39 .
5. Multiply line 3 by 21% | 21).

6. Subtract line 5 from line 4 a zero

or less, enter zero) . _

Compare line 6 of the worksheet with
the amount of credit shown on Form 2441,
line 8.

@ If line 6 (above) is more than your
credit, you do not have to complete Form
6251. Enter on Form 1040, line 40, the
amount of your credit shown on Form 2441,
line 8.

e If your credit is more than the amount
on line 6 (above), get Form 6251 and
complete it through line 15. Then figure the
limit on your credit as follows:

A. Enter amount from Form 1040,

line 39 ——
B. Enter the amount from Form

6251, line 15 .

C. Maximum credit. Subtract line B

from line A (if zero or less, enter

zero) . + a

Compare the credit y you first figured on
line 8 of Form 2441 with line C above. Enter
the smaller of the two amounts on line 8 of
Form 2441, and on Form 1040, line 40. If
line C above is the smaller amount, also write
“AMT” in the left margin next to line 40.

‘4 U.S.GPO:1987-0-183-220