What are qualifying dependent care expenses?

Care must be provided to a qualifying dependent child or relative while you work or to enable you to look for work, in order to be eligible to use this credit.

Expenses are considered work related only if both of the following are true:

• They allow you (and your spouse if filing jointly) to work or look for work.
• They are for a qualifying person’s care.

Working or Looking for Work
To be work related, your expenses must allow you to work or look for work. If you are married, generally both you and your spouse must work or look for work. One spouse is treated as working during any month he or she is a full-time student or isn’t physically or mentally able to care for himself or herself.

Your work can be for others or in your own business or partnership. It can be either full-time or part time. Work also includes actively looking for work. However, if you don’t find a job and have no earned income for the year, you can’t take this credit.

An expense isn’t considered work related merely because you had it while you were working. The purpose of the expense must be to allow you to work. Whether your expenses allow you to work or look for work depends on the facts.

Example 1. The cost of a babysitter while you and your spouse go out to eat isn’t normally a work related expense.

Example 2. You work during the day. Your spouse works at night and sleeps during the day. You pay for care of your 5 year-old child during the hours when you are working and your spouse is sleeping. Your expenses are considered work related.

Volunteer work.
For this purpose, you aren’t considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. Work for part of year. If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work related. However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (21/2 months × $250).

Temporary absence from work.
You don’t have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. Instead, you can figure your credit including the expenses you paid for the period of absence. An absence of 2 weeks or less is a short, temporary absence. An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances.

Example. You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. You become ill and miss 4 months of work but receive sick pay. You continue to pay the nanny to care for the children while you are ill. Your absence isn’t a short, temporary absence, and your expenses aren’t considered work related.

Part-time work.
If you work part-time, you must generally figure your expenses for each day. However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you didn’t work. Any day when you work at least 1 hour is a day of work.

Example 1. You work 3 days a week. While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. You can pay the center $150 for any 3 days a week or $250 for 5 days a week. Your child attends the center 5 days a week. Your work-related expenses are limited to $150 a week.

Example 2. The facts are the same as in Example 1, except the center doesn’t offer a 3-day option. The entire $250 weekly fee may be a work related expense.