Source: https://www.law.cornell.edu/cfr/text/26/1.21-2
Timestamp: 2019-09-21 19:34:24
Document Index: 763696570

Matched Legal Cases: ['§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1']

26 CFR § 1.21-2 - Limitations on amount creditable. | CFR | US Law | LII / Legal Information Institute
Section 1.21-2. Limitations on amount creditable.
26 CFR § 1.21-2 - Limitations on amount creditable.
§ 1.21-2 Limitations on amount creditable.
(a)Annual dollar limitation.
(1) The amount of employment-related expenses that may be taken into account under § 1.21-1(a) for any taxable year cannot exceed -
(4) A taxpayer is not required to prorate the annual dollar limitation if a qualifying individual ceases to qualify (for example, by turning age 13) during the taxable year. However, the taxpayer may take into account only amounts that qualify as employment-related expenses before the disqualifying event. See also § 1.21-1(b)(6).
(b)Earned income limitation -
(1)In general. The amount of employment-related expenses that may be taken into account under section 21 for any taxable year cannot exceed -
(2)Determination of spouse. For purposes of this paragraph (b), a taxpayer must take into account only the earned income of a spouse to whom the taxpayer is married at the close of the taxable year. The spouse's earned income for the entire taxable year is taken into account, however, even though the taxpayer and the spouse were married for only part of the taxable year. The taxpayer is not required to take into account the earned income of a spouse who died or was divorced or separated from the taxpayer during the taxable year. See § 1.21-3(b) for rules providing that certain married taxpayers legally separated or living apart are treated as not married.
(3)Definition of earned income. For purposes of this section, the term earned income has the same meaning as in section 32(c)(2) and the regulations thereunder.
(4)Attribution of earned income to student or incapacitated spouse.
(i) For purposes of this section, a spouse is deemed, for each month during which the spouse is a full-time student or is a qualifying individual described in § 1.21-1(b)(1)(iii) or (b)(2)(iii), to be gainfully employed and to have earned income of not less than -
(iii)Earned income may be attributed under this paragraph (b)(4), in the case of any husband and wife, to only one spouse in any month.
(c)Examples. The provisions of this section are illustrated by the following examples:
For all of 2007, V is a full-time student and W, V's husband, is an individual who is incapable of self-care (as defined in § 1.21-1(b)(1)(iii)). V and W have no earned income and pay expenses of $5,000 for W's care. Under paragraph (b)(4) of this section, either V or W may be deemed to have $3,000 of earned income. However, earned income may be attributed to only one spouse under paragraph (b)(4)(iii) of this section. Under the limitation in paragraph (b)(1)(ii) of this section, the lesser of V's and W's earned income is zero. V and W may not take the expenses into account under section 21.
(d)Cross-reference. For an additional limitation on the credit under section 21, see section 26.
[T.D. 9354, 72 FR 45341, Aug. 14, 2007]