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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
them. For example, if you have two qualifying children, Example 2. Randall is married and both he and his
one age 3 and one age 11, and you incur $6,000 of quali- wife are employed. Each has earned income in excess of
fying work-related expenses for the 3-year-old, and no $6,000. They have two children, Anne and Andy, ages 2
qualifying work-related expenses for the 11-year-old, you and 4, who attend a daycare facility licensed and regula-
can use $6,000, to figure the credit. In this situation, you ted by the state. Randall's work-related expenses are
should list $6,000 for the 3-year-old child and -0- for the $6,000 for the year.
11-year-old child. The $6,000 limit would be used to com- Randall's employer has a dependent care assistance
pute your credit unless you have already excluded or de- program as part of its cafeteria plan, which allows employ-
ducted dependent care benefits paid to you (or on your ees to make pre-tax contributions to a dependent care
behalf) by your employer. flexible spending arrangement. Randall has elected to
take the maximum $5,000 exclusion from his salary to
Yearly limit. The dollar limit is a yearly limit. The amount cover dependent care expenses through this program.
of the dollar limit remains the same no matter how long, Although the dollar limit for his work-related expenses
during the year, you have a qualifying person in your is $6,000 (two or more qualifying persons), Randall fig-
household. Use the $3,000 limit if you had one qualifying ures his credit on only $1,000 of the $6,000 work-related
person at any time during the year. Use $6,000 if you had expense paid. This is because his dollar limit is reduced
more than one qualifying person at any time during the as shown next.
year.
Randall's Reduced Dollar Limit
Example 1. You pay $500 a month for after-school 1) Maximum allowable expenses for two
care for your son. He turned 13 on May 1 and is no longer qualifying persons. . . . . . . . . . . . . . . . . . . . . . $6,000
a qualifying person. You can use the $2,000 of expenses 2) Minus: Dependent care benefits selected
for his care January through April to figure your credit be- from employer's cafeteria plan and
cause it isn't more than the $3,000 yearly limit. excluded from Randall's income . . . . . . . . . . . . . −5,000
3) Reduced dollar limit on work-related expenses
Example 2. In July of this year, to permit your spouse Randall can use for the credit. . . . . . . . . . . . . . . $1,000
to begin a new job, you enrolled your 3-year-old daughter
in a nursery school that provides preschool childcare. You
Amount of Credit
paid $400 per month for the childcare. You can use the full
$2,400 you paid ($400 × 6 months) as qualified expenses
To determine the amount of your credit, multiply your
because it isn't more than the $3,000 yearly limit.
work-related expenses (after applying the earned income
and dollar limits) by a percentage. This percentage de-
Reduced Dollar Limit pends on your adjusted gross income shown on Form
1040, 1040-SR, or 1040-NR, line 11. The following table
If you received dependent care benefits that you exclude shows the percentage to use based on adjusted gross in-
or deduct from your income, you must subtract that come.
amount from the dollar limit that applies to you. Your re-
duced dollar limit is figured on Form 2441, Part III. See IF your adjusted gross income is: THEN the
Dependent Care Benefits , earlier, for information on ex- Over: But not over: percentage is:
cluding or deducting these benefits. $ 0 — $15,000 35%
15,000 — 17,000 34%
Example 1. George is a widower with one child and 17,000 — 19,000 33%
earns $24,000 a year. He pays work-related expenses of 19,000 — 21,000 32%
$2,900 for the care of his 4-year-old child and qualifies to 21,000 — 23,000 31%
claim the credit for child and dependent care expenses. 23,000 — 25,000 30%
His employer pays directly to his dependent care provider 25,000 — 27,000 29%
an additional $1,000 under a qualified dependent care 27,000 — 29,000 28%
29,000 — 31,000 27%
benefit plan. This $1,000 is excluded from George's in- 31,000 — 33,000 26%
come. 33,000 — 35,000 25%
Although the dollar limit for his work-related expenses 35,000 — 37,000 24%
is $3,000 (one qualifying person), George figures his 37,000 — 39,000 23%
credit on only $2,000 of the $2,900 work-related expenses 39,000 — 41,000 22%
he paid. This is because his dollar limit is reduced as 41,000 — 43,000 21%
shown next. 43,000 — No limit 20%
George's Reduced Dollar Limit To qualify for the credit, you must have one or more
qualifying persons. You should show the expenses for
1) Maximum allowable expenses for one
qualifying person. . . . . . . . . . . . . . . . . . . . . . $3,000 each person on Form 2441, line 2, column (d). It is possi-
2) Minus: Dependent care benefits George ble a qualifying person could have no expenses and a
excludes from income. . . . . . . . . . . . . . . . . . . −1,000 second qualifying person could have expenses exceeding
3) Reduced dollar limit on expenses George $3,000. You should list -0- for the one person and the ac-
can use for the credit. . . . . . . . . . . . . . . . . . . $2,000 tual amount for the second person. The $6,000 limit that
Publication 503 (2022) Page 13
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