room D441 Expenses for Household and Dependent Care Services

Department of the Treasury f i
Intornal Revenue Service D> Attach to Form 1040 (See instructions on back)

1975

Name(s) as shown on Form 1040 Your social security number Employer identification number (see instruction H)

1 Monthly amounts incurred for employment. | January | February March April May June duly August | September | October

November | December

related expenses in the household (See General
Instruction B and Specific Instructions for line 1):

(a) Dependent under age 15.

(b) Disabled dependent. . . . . -

(c) Disabled spouse .

Monthly amounts incurred for services ‘outside the
household for care of dependents under age 15. Enter
lesser of amount incurred, or $200 for one, $300 for
two, or $400 for three or more .

vn

Total (Add lines 1(a), 1(b), 1(c), and 2) .

If you entered employment-related expenses for a dis-
abled dependent on fine 1(b), above, and the combined
amount of adjusted gross income and disability pay-
ments received this year by that dependent is in excess
of $750, divide the excess over $750 by the number of
months for which you have listed amounts on line 1(b)..
Enter this result or the monthly amount on line 1(b),
whichever is smaller, in each monthly column in which
an amount is listed on fine 1(b) (See Specific Instruc-
tions for lines 4 and 5)

aw

If you entered employment-related expenses for a dis-
abled spouse on line 1(c), above, and your disabled
spouse received disability payments, divide the total dis-
ability payments received this year by the number of
months for which you have listed amounts on line 1(c).
Enter this result or the monthly amount on line 1(c),
whichever is smaller, in each monthly column in which
an amount is listed online 1(c) (See Specific Instruc-
tions for lines 4 and 5) . .

a

Total (Add lines 4 and 5) .

Subtract line 6 from line 3 .

Monthly limitation. . . Loe - : 400.00 | 400.00 | 400.00 | 400.00 | 400.00 | 400.00 | 400.00 | 400.00 | 400.00 | 400.00

400.00 | 400.00

Enter lesser of line 7 or line 8 .

SO NNO

If your adjusted gross income (Form 1040, line 15) is
larger than $18,000, divide the amount over $18,000
by 24, Enter this result in each monthly column in
which you have an amount listed on line 3 .

1

iy

Subtract line 10 from line 9. If line 10
greater than line 9, enter a zero .

12 Add amounts on line 11 andentertotal here . . . oe . a

13 Total amounts listed on line 11 paid during this taxable year or a prior taxable ye year ‘(see Specific Instructions for line 13). ee ee ee
14 Enter lesser of line 12 or line 13 .

15 Deductible household and dependent care expenses incurred in prior ‘taxable year not paid until this taxable | year (Attach schedule showing computation of
deduction—see Specific Instructions for line 15). .
16 Allowable deduction this taxable year (Add lines 14 and 15) Enter | total here and include on 1 Schedule iN (Form 1040), line 32. oe ee

Have appropriate wage tax returns on wages paid for services in the home (line 1 above) been filed? (For information, see Form 942 instructions) . . . .

- .{] Yes [] No

16—82501-1


General Instructions

A. Who May Claim This Deduction.—If you
maintain a household which includes as a
member one or more qualifying individuals
(See Specific Instructions for line 1), you may
be allowed a deduction for employment-related
expenses PAID during the taxable year.

You will be treated as maintaining a house-
hold for any year only if you furnish over half
the cost of maintaining the household for that
year. If you are married for a year, you and
your spouse must provide over half the main-
tenance cost for that year,

The expenses of maintaining a household
include property taxes, mortgage interest, rent,
utility charges, upkeep and repairs, property
insurance, and food consumed on the prem-
ises. They do not include the cost of clothing,
education, medical treatment, vacations, life
insurance, and transportat

B, Employment-related Expenses.—"Em-
ployment-related expenses” are those paid for
the following, but only if paid to enable you to
be gainfully employed:

(1) Expenses for household services.—Ex-
penses will be considered for household serv-
ices in your home if they are for the ordinary
and usual services necessary for the operation
of the home, and bear some relationship to the
qualifying individual. Thus, payment for serv-
ices of a domestic maid or’ cook will ordinarily
be considered expenses for household services
if performed at least partially for the benefit of
the qualifying individual. Payments for services
of an individual employed predominantly as a
chauffeur, bartender, or gardener will not be
considered expenses for household services.

(2) Expenses for the care of a qualifying
individual.—Expenses will be considered for
the care of one or more qualifying individuals
if their main purpose was to assure that in-
dividual’s well-being and protection. Payments
for food, clothing, or education are not such
expenses. However, if the care provided in-
cludes expenses that cannot be separated, the
full amount paid will be considered for the
qualifying individual's care. Thus, the full
amount paid to a nursery school will be con-
sidered for the care of a child even though the
school also furnishes lunch. Educational ex-
penses for a child in the first or higher grade
level are not expenses for the child's care.

C. Special Rules.—

(1) Married couples must file joint re-
turns.—If you are married at the end of the
taxable year, the deduction for employment-
related expenses is allowable only if you and
your spouse file a joint return for the taxable
year.

(2) Gainful_ employment requirement —It
you are married for any period during the tax-
able year, take into account employment-re-
lated expenses incurred during any month of
that year only if:

(2) Both you and your spouse are gainfully
employed on a substantially full-time
basis (three-quarters or more of the
normal or customary work week or the
equivalent during the month) or ac-
tually seeking gainful employment, or

(b) Your spouse is physically or mentally
incapable of self-care.

Self-employment is considered gainful em-

ployment for the purpose of this deduction.

(3) Payments to a related individual—in
computing your deduction you may not include
payments made to a relative of yours or of
your spouse (except for a cousin or any rela-
tive not listed below) or to a dependent house-
hold member. For this exclusion, a relative of
yours or of your spouse includes: son or daugh-
ter and their descendants; stepson or step-
daughter; brother, sister, stepbrother, stepsis-
ter; father or mother and their ancestors; ste
father, stepmother; nephew, niece, uncle, aunt;
son-in-law, daughter-in-law, father-in-law, moth:
er-in-law, brother-in-law, sister-in-law.

D. Child Care Deduction vs. Medical Ex-
penses Deduction.—If an expense qualifies as
both employment-related and medical, you may
treat it either way, as long as you do not de-
duct it twice. If you treat the expense as em-
ployment-related, then any part of it that you

cannot deduct because of the maximum $400
monthly limitation can be treated as part of
your medical expenses.

If you treat the expense as medical, then
the part of it that is not deductible because
of the 3 percent medical deduction limitation
cannot be used as part of your employment-re-
lated expenses.

E. Short-year Filers.—If your return covers
a period of less than 12 months, consult the
Internal Revenue Service for information con-
cerning computation of limitations.

F. Fiscal Year 1975~76 Filers.—If your
fiscal year began after March 29, 1975, change
$18,000 where it appears on line 10 to read
$35,000.

G. Marital Status.—If you are married but
not living with your spouse at the end of your
taxable year or your marital status changed
during the year, consult the Internal Revenue
Service to determine the rules that pertain to
you.

H. Employer Identification Number.—If you
filed wage tax returns for household em-
ployees, enter your employer identification
number in addition to your social security
number.

1. Publication 503.—For more information,
see Publication 503, Child Care and Disabled
Dependent Care, available free from Internal
Revenue Service offices.

Specific Instructions

ine 1.—Enter your monthly employment-
related expenses for the following qualifying
individuals:

(@) A dependent under age 15 whom you
can claim as an exemption. You should
enter the expenses for that dependent
on line 1(a), even if the dependent also
qualifies as a disabled dependent, as
described in (b) below.

(b) A person who is physically or mentally
incapable of self-care whom you either:

(1) are entitled to claim as an ex-
emption (if under age 15, you should
enter the expenses on line 1(a), instead
of on this line); or

(2) would be entitled to claim as an
‘exemption except that the person had
gross income of $750 or more.

(©) Your spouse, if physically or mentally

incapable of self-care.

Enter all your monthly employment-related
expenses for household services on line 1(a)
if those expenses benefited a dependent under
age 15. This rule applies even if the expenses
also benefited a disabled dependent, a di:
abled spouse, or a non-qualifying individual.
For example, ‘consider all the monthly wages
paid a housekeeper who cares for your chil-
dren, ages 9 and 16 years, cares for your di
abled spouse, and performs regular household
cleaning and cooking services, as employment-
related expense includable on line 1(a).

If the services of the housekeeper were for
two or more incapacitated qualifying individ-
uals (none of whom are under age 15) divide
the housekeeper’s wages equally among the
incapacitated individuals. See example under
Specific Instructions for lines 4 and 5.

If the monthly employment-related expenses
for household expenses benefited a qualifying
individual, do not allocate any part of the ex
penses to non-qualifying individuals.

You must determine on a daily basis wheth-
er a person is a qualifying individual, For ex-
ample, if you incurred employment-related ex-
penses for the care of your dependent or
spouse who ceases to be a qualifying in-
dividual on September 16, treat the dependent
or spouse as a qualifying individual through
September 15 only.

Line 2.—You may include employment-re-
lated expenses incurred for services outside
your household, such as nursery school ex-
penses, if they are for the care of a dependent
under age 15 whom you can claim as an ex-
emption, subject to the following limitations for
each month:

(1) $200, in the case of one individual,

(2) $300, in the case of two individuals, and

‘fe US, GOVERNMENT PRINTING OFFICE : 1975-0-575-138

(3) $400, in the case of three or more in-
dividuals.

Lines 4 and 5.—Reduction for Certain Pay-
ments.—If you incurred employment-related
expenses during a month solely for a physically
or mentally incapable dependent (see line 1(b))
or for your disabled spouse (see line 1(c)) re-
duce the amount of those expenses as follows:

(1) Disabled dependent—by the depend-
ent’s adjusted gross income and dis-
ability payments received during the
taxable year which exceed $750 allo-
cable to that month.

(2) Disabled spouse—by your spouse's dis-
ability payments received during the
taxable year allocable to that month.

If you have more than one qualifying dis-
abled individual and you are required to re-
duce employment-related expense on line 4
or 5 for at least one of them, you should com-
plete fines 1-7 only of a separate Form 2441
for each qualifying disabled individual. On line
7 of another Form 2441, enter the total of the
amounts listed on line 7 of each of the sep-
arate Forms 2441. At the bottom of the form
on which you list the totals, write “See at-
tached separate Forms 2441.”

“Disability payment” means a payment
(other than a gift) made on account of the
physical or mental condition of an individual
and not included in gross income.

Example—You have a dependent over age
15, and a spouse. Both are physically incapa-
ble of caring for themselves. You have monthly
employment-related expenses of $50 solely
for the care of the dependent, $100 solely for
the care of your spouse, and $150 for house-
hold services for both. You must allocate the
$150 of monthly household expenses half to
the dependent and half to your spouse. Ac-
cordingly, monthly employment-related ex-
penses of $125 are attributable to the de-
pendent, and monthly employment-related ex-
penses of $175 are attributable to your spouse.
The monthly expenses attributable to each
must_be reduced as provided in line 4 and
fine 5.

Line 8—The $400 amounts printed on line
8 show the monthly limit for deductible
amounts. A deduction is allowable for em-
ployment-related expenses INCURRED during
any month. “Incurred” means owed for pay-
ment, whether or not paid. However, to be
deductible the expenses must be paid dur-
ing your taxable year and must be within the
limitations.

Line 10.—If your adjusted gross income is
less than $18,000, enter a zero on this
If your adjusted gross income exceeds $18,000
for the taxable year, reduce the amount of the
monthly employment-related expenses or the
monthly limitation, whichever is the lesser, by
1/24 of the excess adjusted gross income over
$18,000. If you are married during any period
of the taxable year, you should take into ac-
count the combined adjusted gross income of
you and your spouse for that period.

Line 13.—if in a prior year you paid for an
employment-related expense not incurred until
this year, consider the payment in the prior
year as being paid during this year in the
Month you incurred the expense.

Line 15.—Household_and dependent care
expenses incurred in 1974 may be deductible
in 1975. If you paid for expenses in 1975 that
you incurred in 1974, a deduction is allowable
if you meet the deductibility requirements for
the month you incurred the expenses.

Example—in December 1974, you incurred
employment-related expenses of $600 for your
14-year-old dependent. You paid $300 of the
expenses in 1974, and $300 in 1975. You and
your spouse's combined adjusted gross income
was $17,000 in 1974. You would be allowed
a $100 deduction on line 15 for 1975, com-
puted as follows:

Household and dependent care expenses

incurred in 1974. . . . . . . - $600
Monthly fimitation . . . . . . . . $400
Income limitation. . 2 2. 2 6 6 5 -O-
Deduction. 2 2) 2 2. 2. . . $400
Less deduction 1974. . . 2 5... $300
Deduction 1975. . 2 1. 2. «$100
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