Qualifying Person on Form 2441

[lauren1]

If a client has 2 children but only has qualified expenses for 1, should the child with no daycare expenses be listed as a qualified person on the Form 2441? Both children are under 5. 

Basically, the mother was working for part of the year and had daycare expenses for her 3 year old while she was working. She took time off after she had the baby and stayed home with both children. 

If $0 is placed as the infant's qualified expenses on the Federal Information Worksheet it transfer's the baby's information to the 2441 as a qualified person and doubles their Dependent Care Credit. Is that correct?

Thanks!

[TaxGuyBill · Accepted solution]

From the Instructions for Form 2441:

If you paid qualified expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. This limit doesn't need to be divided equally. For example, if you paid and incurred $2,500 of qualified expenses for the care of one qualifying person and $3,500 for the care of another qualifying person, you can use the total, $6,000, to figure the credit.

To qualify for the credit, you must have one or more qualifying persons. You should show the expenses for each child in column (c) of line 2. However, it is possible a qualifying child could have no expenses and a second child could have expenses exceeding $3,000. You should list -0- for the one child and the actual amount for the second child. The $6,000 limit would still be used to compute your credit unless you have already excluded or deducted, in Part III, certain dependent care benefits paid to you (or on your behalf) by your employer.

https://www.irs.gov/instructions/i2441#idm140245190739088

[lauren1]

Many thanks! I guess I'm feeling too impatient at this point in tax season to read the ENTIRE instruction. 🐵

[TaxGuyBill]

I completely understand.  :smile:

[abctax55]

Thanks for the diggin' @TaxGuyBill

[abctax55]

Per research I did a few years ago, apparently yes.

Seems *illogical* and Lacerte gave a diagnostic (I can't remember if it was a critical one or not) indicating that the issue was "subject to interpretation".  I discussed it with my client, and we took it.

[taxes96786]

How do you justify listing a child for whom no expenses were paid on the 2441? No costs should disqualify that child. Perhaps, rather than entering 0.00, one should leave the box blank.

[abctax55]

Umm...because certain case law (edit, it's actually the instructions...)  says you can?

Just because you don't believe it's correct doesn't mean you shouldn't give the client the option.

[lauren1]

In both Publication 503 and the instructions for the Form 2441 nothing indicates that a child is not a "qualified person" based on if you paid for care or not. Thanks abctax55!

[abctax55]

YVW...I remember diggin' into this situation a couple of years ago for my office manager.