OMB No. 1545-0068

1985

Your social security number

Credit for Child and Dependent Care Expenses

rom 2441

Department of the Treasury
Internal Revenue Service

> Attach to Form 1040.
> See Instructions below.

Name(s) as shown on Form 1040

1 Write the number of qualifying persons who were cared for in 1985. (See the instructions below for the definition of
qualifying persons.) . . . : rr i
2 If payments listed on line 3 were emade to an n individual, complete ‘the following: Yes| No
a If you paid $50 or more in a calendar quarter to an individual, were the services performed in yourhome? . . - 2a
bif “Yes,” have you filed appropriate wage tax returns on wages for services in your home (see the instructions for a
Hine2y2

Employer ID number
¢ If the answer to b is ‘'Yes,"’ write your employer identification number. . . . 2. Bm | 2c
3 Write the amount of qualified expenses you incurred and actually paid in 1985 for the care of the
qualifying person, but do not write more than $2,400 ($4,800 if you paid for the care of two or more
qualifyingpersons). . . . . 3

4 You must write your earned income on ‘ine 4c. See the instructions for line 4 for the definition of
earned income

@ If you were unmarried at the end of 1985, write your earned income on line 4c, OR
e If you are married, filing a joint return for 1985, you must complete lines 4a and 4b.

a Write your earned income
b Write your spouse's earned income

¢ Compare amounts on lines 4a and 4b, and write ‘the smaller ‘of the | twoamountsonline4c. . . | 4¢

4a

4b

5 Compare amounts on lines 3 and 4c, and write the smaller of the two amounts on line 5

6 Write the percentage from the table below that applies to the adjusted gross income on Form 1040,

line 33 coe
If line 33 is:

Percentage iss

If line 233 is: ‘Percentage is:

Over— — But not
over—

$0-10,000
10,000-12,000
12,000-14,000
14,000-16,000
16,000-18,000
18,000-20,000

30% (.30)
29% (.29)
28% (.28)
27% (.27)
26% (.26)
25% (.25)

Over— = But not
over—

$20,000-22,000
22,000-24,000
24,000-26,000
26,000-28,000
28,000

24% (.24)
23% (.23)
22% (.22)
21% (.21)
20% (.20)

7 Multiply the amount on line 5 by the percentage shown on line 6, and write the result.

8 Multiply any child and dependent care expenses for 1984 that you paid in 1985 by the percentage that
applies to the adjusted gross income on Form 1040, line 33, for 1984. Write the result. (See line 8

instructions for the required statement.) .

9 Add amounts on lines 7 and 8. Write the total here and on n Form 1040, line 41. “This i is s the m maximum

amount of your credit for child and dependent care expenses

9

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 1985. The credit
will lower the amount of your tax. The credit
is based on a percentage of the amount you
paid during the year. The most you may
take as a credit is $720 if you paid for the
care of one qualifying person, or $1,440 if
you paid for the care of two or more
qualifying persons.

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

Who Is a Qualifying Person?

A qualifying person is any one of the
following persons:

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

© Your disabled spouse who is mentally or
physically unable to care for himself or
herself.

© 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 $1,040
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 1985, 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

(Continued on back)

Form 2441 (1985)


Form 2441 (1985)

Page 2

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, or a similar state-
ment, agreeing not to claim the child's
exemption for 1985; 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 4
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.
4. The person you paid to provide the care
was not your spouse or a person you could
claim as a dependent.
Note: If the person you paid to provide the
care was your child, he or she must have
been 19 or over by the end of 1985.
5. If you were married at the end of 1985,
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, governess,
or cleaning person if the services were
partly for the care of the qualifying person.

Care of the qualifying person.—Care
includes the cost of services for the
qualifying person's well-being and
protection.

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:

a. Your dependent under age 15; or

b. Any other qualifying person who
regularly spends at least 8 hours each
day in your home.

Care that is provided by a dependent care
center may be counted if the center
complies with all applicable state and local
Jaws and regulations. A dependent care
center is a place that provides care for at
least seven persons (other than persons
who live there), and receives a fee,
payment, or grant for providing the services
for any of those persons, regardless of
whether the center is run for profit.
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

The following are specific instructions for
most of the lines on the form. Lines which
have no instructions here are self-
explanatory

Line 2.—In general, if you paid cash wages
of $50 or more in a calendar quarter for
household services provided by a person
such as a housekeeper, maid, babysitter, or
cook, you must file an employment tax
return. If you are not sure whether you
should file an employment tax return, get
Form 942, Employer's Quarterly Tax
Return for Household Employees.

Note: You should file a Form 940,
Employer's Annual Federal Unemployment
(FUTA) Tax Return, for 1985 by January 31,
1986, if you paid cash wages of $1,000 or
more for household services in any calendar
quarter in 1984 or 1985.

Line 3. Dollar limit.—On line 3 write the
amount of qualified child and dependent
care expenses you incurred and actually
paid in 1985. 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 3 qualified
expenses that you incurred in 1985 but did
not pay until 1986. Instead, you may be
able to increase the amount of your 1986
creait when you pay the 1985 expenses in
1986.

Line 4. Earned income limit.—Figure your
earned income limitation on line 4. 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. For more
information on what is earned income for
purposes of the credit, see Publication 503.

Unmarried taxpayers.—If you were
unmarried at the end of 1985 or are treated
as being unmarried at the end of the year,
write your earned income on line 4c.
Married taxpayers.—If you are married,
filing a joint return, figure each spouse's
earned income separately and disregard
community property laws. Write your
earned income on line 4a and your spouse's
earned income on line 4b. Then, write the
smaller of your earned income or your
spouse's earned income on line 4c.

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 1985).

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 1985.

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. See 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 8.—If you had qualified expenses for
1984 that you did not pay until 1985, you
may be able to increase the amount of
credit you may take in 1985. To do this,
multiply the 1984 expenses you paid in
1985 by the percentage from the table on
line 6 that applies to the adjusted gross
income shown on your 1984 Form 1040,
line 33. Your 1984 expenses must be within
the 1984 limits. Attach a computation
showing how you figured the increase, (Use
the example in Publication 503 as a guide.)