om 2441

Department of the Treasury
Internal Revenue Service

Credit for Child and Dependent Care Expenses

> Attach to Form 1040.
> See instructions below.

OMB No. 1545-0068

1988

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 1988. (See instructions for definition of qualifyinj

Caution: To qualify, the person(s) must have shared the same home with you in 1988.

Enter the amount of qualified expenses you incurred and actually paid in 1988 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)

3a You must enter your earned income on line 3a. See line 3 instructions for definition ‘of eared i income

b If you are married, filing a joint return for 1988, 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. )

¢ 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
4

elf you were unmarried at the end of 1988, compare 2 the amounts 0 on lines 52 ‘and 3a,

and enter the smaller of the two amounts on line 4.
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.

If line 31 is:

Enter decimal amount from table below that applies to the adjusted gross income on Form 1040, line 31
Decimal amount is:

Ifline 31 is: Decimal amount is:

Over— But not

over—
$0-10,000
10,000-12,000
12,000-14,000
14,000-16,000
16,000-18,000
8,000-20,000

Over— But not

over—

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

6 Multiply the amount on line 4 by the decimal amount on line 5, and enter the result

7 Multiply any child and dependent care expenses for 1987 that you paid in 1988 by the percentage that
applies to the adjusted gross income on your 1987 Form 1040, line 31, or Form 1040A, line 13. Enter

the result. (See line 7 instructions for the required statement.) .

8 Add amounts on lines 6 and 7. See the worksheet in the instructions for line 8 forthe amount of credit

you can claim .

persons.) | 1

3a

3b

3c

7

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.
The time needed to complete and file this
form will vary depending on individual
circumstances. The estimated average time
is:

Recordkeeping 20 minutes
Learning about the

law or the form 11 minutes
Preparingthe form 16 minutes
Copying, assembling,

and sending the form

to IRS 17 minutes

If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form more
simple, we would be happy to hear from
you. You can write to either IRS or the
Office of Management and Budget at the
addresses listed in the instructions of
Form 1040.

What Is the Child and ‘Dependent
Care Expenses Credit?

You may be able to take this credit if you
paid someone to care for your child or other
qualifying person so you could work or look
for work in 1988. The credit may be as
much as $720 ($1,440 if two or more
qualifying persons were cared for).
Additional information.—For more details,
please get Pub. 503, Child and Dependent
Care Credit.

Who Is a Qualifying Person?

A qualifying person is:

@ Any person under age 15 whom you claim
as a dependent (but see 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 $1,950 or more.
Children of divorced or separated
parents.—If you were divorced, legally
separated, or lived apart from your spouse
during the last 6 months of 1988, 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, or a similar statement,
agreeing not to claim the child’s exemption
for 1988; 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: (Continued on back)

Form 2441 (1988)


Form 2441 (1988)

Page 2

1. You paid for the care so you (and your
spouse if you were married) could work or
look for work (but see 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: /f you paid your child to provide the
care, he or she must have been 19 or older
by the end of 1988.
5. If you were married at the end of 1988,
generally, you must file a joint tax return.
But 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, 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. Child support payments are not
qualified expenses.

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 1987 or 1988, you should file a
Form 940 for 1988 by January 31, 1989.
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.

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.

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, or the expenses for
sending your child to an overnight camp.
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). Get Pub. 503 for
details.

Specific Instructions

Line 2. Dollar limit.—Enter the amount of
qualified expenses you incurred and
actually paid in 1988. But 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 to the extent they are excluded
from gross income.

Note: Do not include on line 2 qualified
expenses that you incurred in 1988 but did
not pay until 1989. Instead, you may be
able to increase your 1989 credit when you
pay the 1988 expenses in 1989.

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 3 (or 3c if you file section B).
Unmarried taxpayers.—|If you were
unmarried at the end of 1988 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, 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
1988, had no earned income, and you file a
joint return for 1988, see Pub. 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 1988).

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
during each of 5 months during 1988. The
months need not be consecutive.
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 Pub. 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
1987 that you did not pay until 1988, you
may be able to increase the amount of
credit you may take in 1988. To do this,
multiply the 1987 expenses you paid in
1988 by the percentage from the table on
line 5 that applies to the adjusted gross
income shown on your 1987 Form 1040,
line 31, or Form 1040A, line 13. Your 1987
expenses must be within the 1987 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
low.

Get Form 6251 if:

e 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 23

(Add to line 1 any tax exempt
interest from private activity
bonds issued after August 7,
1986, and any net operating loss
deduction.)
. Enter: $30,000 if single or head
of household; $40,000 if
married filing jointly; or $20,000
if married filing separately
Subtract line 2 from line 1. If the
result is zero or less, STOP
HERE and enter on Form 1040,
line 41, the amount of your
credit shown on line 8 of Form
2441. Otherwise, goon toline4 .
4.Enter the amount from Form

1040, line 40
5. Multiply line 3 by.21
6. Subtract line 5 from line 4 at 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 41, the
amount of your credit shown on Form 2441,
line 8.
@ If your credit is more than the amount
‘online 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 40
B. Enter the amount from Form

6251, line 15 .
C. Maximum credit. Subtract line 8

from line A (if zero or ‘less, enter

zero) . : ——_.

Compare the credit 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 41. If line C above is the smaller
amount, also write “AMT” in the left margin
next to line 41.

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