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Tax Planning Us 1040a

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Tax Planning Us 1040a

Tax planning us 1040a 10. Tax planning us 1040a   Self-Employment (SE) Tax Table of Contents Who Must Pay SE Tax?Special Rules and Exceptions Figuring Earnings Subject to SE Tax Farm Optional Method Using Both Optional Methods Reporting Self-Employment Tax The SE tax rules apply no matter how old you are and even if you are already receiving social security and Medicare benefits. Tax planning us 1040a Who Must Pay SE Tax? Generally, you must pay SE tax and file Schedule SE (Form 1040) if your net earnings from self-employment were $400 or more. Tax planning us 1040a Use Schedule SE to figure net earnings from self-employment. Tax planning us 1040a Sole proprietor or independent contractor. Tax planning us 1040a   If you are self-employed as a sole proprietor or independent contractor, you generally use Schedule C or C-EZ (Form 1040) to figure your earnings subject to SE tax. Tax planning us 1040a SE tax rate. Tax planning us 1040a    For 2013, the SE tax rate on net earnings is 15. Tax planning us 1040a 3% (12. Tax planning us 1040a 4% social security tax plus 2. Tax planning us 1040a 9% Medicare tax). Tax planning us 1040a Maximum earnings subject to self-employment tax. Tax planning us 1040a    Only the first $113,700 of your combined wages, tips, and net earnings in 2013 is subject to any combination of the 12. Tax planning us 1040a 4% social security part of SE tax, social security tax, or railroad retirement (tier 1) tax. Tax planning us 1040a   All of your combined wages, tips, and net earnings in 2013 are subject to any combination of the 2. Tax planning us 1040a 9% Medicare part of SE tax, social security tax, or railroad retirement (tier 1) tax. Tax planning us 1040a   If your wages and tips are subject to either social security or railroad retirement (tier 1) tax, or both, and total at least $113,700, do not pay the 12. Tax planning us 1040a 4% social security part of the SE tax on any of your net earnings. Tax planning us 1040a However, you must pay the 2. Tax planning us 1040a 9% Medicare part of the SE tax on all your net earnings. Tax planning us 1040a Special Rules and Exceptions Aliens. Tax planning us 1040a   Generally, resident aliens must pay self-employment tax under the same rules that apply to U. Tax planning us 1040a S. Tax planning us 1040a citizens. Tax planning us 1040a Nonresident aliens are not subject to SE tax unless an international social security agreement in effect determines that they are covered under the U. Tax planning us 1040a S. Tax planning us 1040a social security system. Tax planning us 1040a However, residents of the Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are subject to self-employment tax, as they are considered U. Tax planning us 1040a S. Tax planning us 1040a residents for self-employment tax purposes. Tax planning us 1040a For more information on aliens, see Publication 519, U. Tax planning us 1040a S. Tax planning us 1040a Tax Guide for Aliens. Tax planning us 1040a Child employed by parent. Tax planning us 1040a   You are not subject to SE tax if you are under age 18 and you are working for your father or mother. Tax planning us 1040a Church employee. Tax planning us 1040a    If you work for a church or a qualified church-controlled organization (other than as a minister or member of a religious order) that elected an exemption from social security and Medicare taxes, you are subject to SE tax if you receive $108. Tax planning us 1040a 28 or more in wages from the church or organization. Tax planning us 1040a For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Tax planning us 1040a Fishing crew member. Tax planning us 1040a   If you are a member of the crew on a boat that catches fish or other water life, your earnings are subject to SE tax if all the following conditions apply. Tax planning us 1040a You do not get any pay for the work except your share of the catch or a share of the proceeds from the sale of the catch, unless the pay meets all the following conditions. Tax planning us 1040a The pay is not more than $100 per trip. Tax planning us 1040a The pay is received only if there is a minimum catch. Tax planning us 1040a The pay is solely for additional duties (such as mate, engineer, or cook) for which additional cash pay is traditional in the fishing industry. Tax planning us 1040a You get a share of the catch or a share of the proceeds from the sale of the catch. Tax planning us 1040a Your share depends on the amount of the catch. Tax planning us 1040a The boat's operating crew normally numbers fewer than 10 individuals. Tax planning us 1040a (An operating crew is considered as normally made up of fewer than 10 if the average size of the crew on trips made during the last four calendar quarters is fewer than 10. Tax planning us 1040a ) Notary public. Tax planning us 1040a   Fees you receive for services you perform as a notary public are reported on Schedule C or C-EZ but are not subject to self-employment tax (see the Instructions for Schedule SE (Form 1040)). Tax planning us 1040a State or local government employee. Tax planning us 1040a   You are subject to SE tax if you are an employee of a state or local government, are paid solely on a fee basis, and your services are not covered under a federal-state social security agreement. Tax planning us 1040a Foreign government or international organization employee. Tax planning us 1040a   You are subject to SE tax if both the following conditions are true. Tax planning us 1040a You are a U. Tax planning us 1040a S. Tax planning us 1040a citizen employed in the United States, Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or the Virgin Islands by: A foreign government, A wholly-owned agency of a foreign government, or An international organization. Tax planning us 1040a Your employer is not required to withhold social security and Medicare taxes from your wages. Tax planning us 1040a U. Tax planning us 1040a S. Tax planning us 1040a citizen or resident alien residing abroad. Tax planning us 1040a    If you are a self-employed U. Tax planning us 1040a S. Tax planning us 1040a citizen or resident alien living outside the United States, in most cases you must pay SE tax. Tax planning us 1040a Do not reduce your foreign earnings from self-employment by your foreign earned income exclusion. Tax planning us 1040a Exception. Tax planning us 1040a    The United States has social security agreements with many countries to eliminate double taxation under two social security systems. Tax planning us 1040a Under these agreements, you generally must only pay social security and Medicare taxes to the country in which you live. Tax planning us 1040a The country to which you must pay the tax will issue a certificate which serves as proof of exemption from social security tax in the other country. Tax planning us 1040a   For more information, see the Instructions for Schedule SE (Form 1040). Tax planning us 1040a More Than One Business If you have earnings subject to SE tax from more than one trade, business, or profession, you must combine the net profit (or loss) from each to determine your total earnings subject to SE tax. Tax planning us 1040a A loss from one business reduces your profit from another business. Tax planning us 1040a Community Property Income If any of the income from a trade or business, other than a partnership, is community property income under state law, it is included in the earnings subject to SE tax of the spouse carrying on the trade or business. Tax planning us 1040a Gain or Loss Do not include in earnings subject to SE tax a gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers. Tax planning us 1040a It does not matter whether the disposition is a sale, exchange, or an involuntary conversion. Tax planning us 1040a Lost Income Payments If you are self-employed and reduce or stop your business activities, any payment you receive from insurance or other sources for the lost business income is included in earnings subject to SE tax. Tax planning us 1040a If you are not working when you receive the payment, it still relates to your business and is included in earnings subject to SE tax, even though your business is temporarily inactive. Tax planning us 1040a Figuring Earnings Subject to SE Tax Methods for Figuring Net Earnings There are three ways to figure your net earnings from self-employment. Tax planning us 1040a The regular method. Tax planning us 1040a The nonfarm optional method. Tax planning us 1040a The farm optional method. Tax planning us 1040a You must use the regular method unless you are eligible to use one or both of the optional methods. Tax planning us 1040a Why use an optional method?    You may want to use the optional methods (discussed later) when you have a loss or a small net profit and any one of the following applies. Tax planning us 1040a You want to receive credit for social security benefit coverage. Tax planning us 1040a You incurred child or dependent care expenses for which you could claim a credit. Tax planning us 1040a (An optional method may increase your earned income, which could increase your credit. Tax planning us 1040a ) You are entitled to the earned income credit. Tax planning us 1040a (An optional method may increase your earned income, which could increase your credit. Tax planning us 1040a ) You are entitled to the additional child tax credit. Tax planning us 1040a (An optional method may increase your earned income, which could increase your credit. Tax planning us 1040a ) Effects of using an optional method. Tax planning us 1040a   Using an optional method could increase your SE tax. Tax planning us 1040a Paying more SE tax could result in your getting higher benefits when you retire. Tax planning us 1040a   If you use either or both optional methods, you must figure and pay the SE tax due under these methods even if you would have had a smaller tax or no tax using the regular method. Tax planning us 1040a   The optional methods may be used only to figure your SE tax. Tax planning us 1040a To figure your income tax, include your actual earnings in gross income, regardless of which method you use to determine SE tax. Tax planning us 1040a Regular Method Multiply your total earnings subject to SE tax by 92. Tax planning us 1040a 35% (. Tax planning us 1040a 9235) to get your net earnings under the regular method. Tax planning us 1040a See Short Schedule SE, line 4, or Long Schedule SE, line 4a. Tax planning us 1040a Net earnings figured using the regular method are also called actual net earnings. Tax planning us 1040a Nonfarm Optional Method Use the nonfarm optional method only for earnings that do not come from farming. Tax planning us 1040a You may use this method if you meet all the following tests. Tax planning us 1040a You are self-employed on a regular basis. Tax planning us 1040a This means that your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. Tax planning us 1040a The net earnings can be from either farm or nonfarm earnings or both. Tax planning us 1040a You have used this method less than 5 years. Tax planning us 1040a (There is a 5-year lifetime limit. Tax planning us 1040a ) The years do not have to be one after another. Tax planning us 1040a Your net nonfarm profits were: Less than $5,024, and Less than 72. Tax planning us 1040a 189% of your gross nonfarm income. Tax planning us 1040a Net nonfarm profits. Tax planning us 1040a   Net nonfarm profit generally is the total of the amounts from: Line 31, Schedule C (Form 1040), Line 3, Schedule C-EZ (Form 1040), Box 14, code A, Schedule K-1 (Form 1065) (from nonfarm partnerships), and Box 9, code J1, Schedule K-1 (Form 1065-B). Tax planning us 1040a   However, you may need to adjust the amount reported on Schedule K-1 if you are a general partner or if it is a loss. Tax planning us 1040a Gross nonfarm income. Tax planning us 1040a   Your gross nonfarm income generally is the total of the amounts from: Line 7, Schedule C (Form 1040), Line 1, Schedule C-EZ (Form 1040), Box 14, code C, Schedule K-1 (Form 1065) (from nonfarm partnerships), and Box 9, code J2, Schedule K-1 (Form 1065-B). Tax planning us 1040a Figuring Nonfarm Net Earnings If you meet the three tests explained earlier, use the following table to figure your net earnings from self-employment under the nonfarm optional method. Tax planning us 1040a Table 10-1. Tax planning us 1040a Figuring Nonfarm Net Earnings IF your gross nonfarm income is. Tax planning us 1040a . Tax planning us 1040a . Tax planning us 1040a THEN your net earnings are equal to. Tax planning us 1040a . Tax planning us 1040a . Tax planning us 1040a $6,960 or less Two-thirds of your gross nonfarm income. Tax planning us 1040a More than $6,960 $4,640 Actual net earnings. Tax planning us 1040a   Your actual net earnings are 92. Tax planning us 1040a 35% of your total earnings subject to SE tax (that is, multiply total earnings subject to SE tax by 92. Tax planning us 1040a 35% (. Tax planning us 1040a 9235) to get actual net earnings). Tax planning us 1040a Actual net earnings are equivalent to net earnings figured using the regular method. Tax planning us 1040a Optional net earnings less than actual net earnings. Tax planning us 1040a   You cannot use this method to report an amount less than your actual net earnings from self-employment. Tax planning us 1040a Gross nonfarm income of $6,960 or less. Tax planning us 1040a   The following examples illustrate how to figure net earnings when gross nonfarm income is $6,960 or less. Tax planning us 1040a Example 1. Tax planning us 1040a Net nonfarm profit less than $5,024 and less than 72. Tax planning us 1040a 189% of gross nonfarm income. Tax planning us 1040a Ann Green runs a craft business. Tax planning us 1040a Her actual net earnings from self-employment were $800 in 2011 and $900 in 2012. Tax planning us 1040a She meets the test for being self-employed on a regular basis. Tax planning us 1040a She has used the nonfarm optional method less than 5 years. Tax planning us 1040a Her gross income and net profit in 2013 are as follows: Gross nonfarm income $5,400 Net nonfarm profit $1,200 Ann's actual net earnings for 2013 are $1,108 ($1,200 × . Tax planning us 1040a 9235). Tax planning us 1040a Because her net profit is less than $5,024 and less than 72. Tax planning us 1040a 189% of her gross income, she can use the nonfarm optional method to figure net earnings of $3,600 (2/3 × $5,400). Tax planning us 1040a Because these net earnings are higher than her actual net earnings, she can report net earnings of $3,600 for 2013. Tax planning us 1040a Example 2. Tax planning us 1040a Net nonfarm profit less than $5,024 but not less than 72. Tax planning us 1040a 189% of gross nonfarm income. Tax planning us 1040a Assume that in Example 1 Ann's gross income is $1,000 and her net profit is $800. Tax planning us 1040a She must use the regular method to figure her net earnings. Tax planning us 1040a She cannot use the nonfarm optional method because her net profit is not less than 72. Tax planning us 1040a 189% of her gross income. Tax planning us 1040a Example 3. Tax planning us 1040a Net loss from a nonfarm business. Tax planning us 1040a Assume that in Example 1 Ann has a net loss of $700. Tax planning us 1040a She can use the nonfarm optional method and report $3,600 (2/3 × $5,400) as her net earnings. Tax planning us 1040a Example 4. Tax planning us 1040a Nonfarm net earnings less than $400. Tax planning us 1040a Assume that in Example 1 Ann has gross income of $525 and a net profit of $175. Tax planning us 1040a In this situation, she would not pay any SE tax under either the regular method or the nonfarm optional method because her net earnings under both methods are less than $400. Tax planning us 1040a Gross nonfarm income of more than $6,960. Tax planning us 1040a   The following examples illustrate how to figure net earnings when gross nonfarm income is more than $6,960. Tax planning us 1040a Example 1. Tax planning us 1040a Net nonfarm profit less than $5,024 and less than 72. Tax planning us 1040a 189% of gross nonfarm income. Tax planning us 1040a John White runs an appliance repair shop. Tax planning us 1040a His actual net earnings from self-employment were $10,500 in 2011 and $9,500 in 2012. Tax planning us 1040a He meets the test for being self-employed on a regular basis. Tax planning us 1040a He has used the nonfarm optional method less than 5 years. Tax planning us 1040a His gross income and net profit in 2013 are as follows: Gross nonfarm income $12,000 Net nonfarm profit $1,200 John's actual net earnings for 2013 are $1,108 ($1,200 × . Tax planning us 1040a 9235). Tax planning us 1040a Because his net profit is less than $5,024 and less than 72. Tax planning us 1040a 189% of his gross income, he can use the nonfarm optional method to figure net earnings of $4,640. Tax planning us 1040a Because these net earnings are higher than his actual net earnings, he can report net earnings of $4,640 for 2013. Tax planning us 1040a Example 2. Tax planning us 1040a Net nonfarm profit not less than $5,024. Tax planning us 1040a Assume that in Example 1 John's net profit is $5,400. Tax planning us 1040a He must use the regular method. Tax planning us 1040a He cannot use the nonfarm optional method because his net nonfarm profit is not less than $5,024. Tax planning us 1040a Example 3. Tax planning us 1040a Net loss from a nonfarm business. Tax planning us 1040a Assume that in Example 1 John has a net loss of $700. Tax planning us 1040a He can use the nonfarm optional method and report $4,640 as his net earnings from self-employment. Tax planning us 1040a Farm Optional Method Use the farm optional method only for earnings from a farming business. Tax planning us 1040a See Publication 225 for information about this method. Tax planning us 1040a Using Both Optional Methods If you have both farm and nonfarm earnings, you may be able to use both optional methods to determine your net earnings from self-employment. Tax planning us 1040a To figure your net earnings using both optional methods, you must: Figure your farm and nonfarm net earnings separately under each method. Tax planning us 1040a Do not combine farm earnings with nonfarm earnings to figure your net earnings under either method. Tax planning us 1040a Add the net earnings figured under each method to arrive at your total net earnings from self-employment. Tax planning us 1040a You can report less than your total actual farm and nonfarm net earnings but not less than actual nonfarm net earnings. Tax planning us 1040a If you use both optional methods, you can report no more than $4,640 as your combined net earnings from self-employment. Tax planning us 1040a Example. Tax planning us 1040a You are a self-employed farmer. Tax planning us 1040a You also operate a retail grocery store. Tax planning us 1040a Your gross income, actual net earnings from self-employment, and optional farm and optional nonfarm net earnings from self-employment are shown in Table 10-2. Tax planning us 1040a Table 10-2. Tax planning us 1040a Example—Farm and Nonfarm Earnings Income and Earnings Farm Nonfarm Gross income $3,000 $6,000 Actual net earnings $900 $500 Optional net earnings (2/3 of gross income) $2,000 $4,000 Table 10-3 shows four methods or combinations of methods you can use to figure net earnings from self-employment using the farm and nonfarm gross income and actual net earnings shown in Table 10-2. Tax planning us 1040a Method 1. Tax planning us 1040a Using the regular method for both farm and nonfarm income. Tax planning us 1040a Method 2. Tax planning us 1040a Using the optional method for farm income and the regular method for nonfarm income. Tax planning us 1040a Method 3. Tax planning us 1040a Using the regular method for farm income and the optional method for nonfarm income. Tax planning us 1040a Method 4. Tax planning us 1040a Using the optional method for both farm and nonfarm income. Tax planning us 1040a Note. Tax planning us 1040a Actual net earnings is the same as net earnings figured using the regular method. Tax planning us 1040a Table 10-3. Tax planning us 1040a Example—Net Earnings Net Earnings 1 2 3 4 Actual  farm $ 900   $ 900   Optional  farm   $ 2,000   $ 2,000 Actual nonfarm $ 500 $ 500     Optional nonfarm     $4,000 $4,000 Amount you can report: $1,400 $2,500 $4,900 $4,640* *Limited to $4,640 because you used both optional methods. Tax planning us 1040a Fiscal Year Filer If you use a tax year other than the calendar year, you must use the tax rate and maximum earnings limit in effect at the beginning of your tax year. Tax planning us 1040a Even if the tax rate or maximum earnings limit changes during your tax year, continue to use the same rate and limit throughout your tax year. Tax planning us 1040a Reporting Self-Employment Tax Use Schedule SE (Form 1040) to figure and report your SE tax. Tax planning us 1040a Then enter the SE tax on line 56 of Form 1040 and attach Schedule SE to Form 1040. Tax planning us 1040a Most taxpayers can use Section A—Short Schedule SE to figure their SE tax. Tax planning us 1040a However, certain taxpayers must use Section B—Long Schedule SE. Tax planning us 1040a If you have to pay SE tax, you must file Form 1040 (with Schedule SE attached) even if you do not otherwise have to file a federal income tax return. Tax planning us 1040a Joint return. Tax planning us 1040a   Even if you file a joint return, you cannot file a joint Schedule SE. Tax planning us 1040a This is true whether one spouse or both spouses have earnings subject to SE tax. Tax planning us 1040a If both of you have earnings subject to SE tax, each of you must complete a separate Schedule SE. Tax planning us 1040a However, if one spouse uses the Short Schedule SE and the other spouse has to use the Long Schedule SE, both can use the same form. Tax planning us 1040a Attach both schedules to the joint return. Tax planning us 1040a More than one business. Tax planning us 1040a   If you have more than one trade or business, you must combine the net profit (or loss) from each business to figure your SE tax. Tax planning us 1040a A loss from one business will reduce your profit from another business. Tax planning us 1040a File one Schedule SE showing the earnings from self-employment, but file a separate Schedule C, C-EZ, or F for each business. Tax planning us 1040a Example. Tax planning us 1040a You are the sole proprietor of two separate businesses. Tax planning us 1040a You operate a restaurant that made a net profit of $25,000. Tax planning us 1040a You also have a cabinetmaking business that had a net loss of $500. Tax planning us 1040a You must file a Schedule C for the restaurant showing your net profit of $25,000 and another Schedule C for the cabinetmaking business showing your net loss of $500. Tax planning us 1040a You file Schedule SE showing total earnings subject to SE tax of $24,500. Tax planning us 1040a Prev  Up  Next   Home   More Online Publications
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The Tax Planning Us 1040a

Tax planning us 1040a Publication 503 - Main Content Table of Contents Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. Tax planning us 1040a Employment Taxes for Household Employers How To Get Tax HelpLow Income Taxpayer Clinics Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040, Form 1040A, or Form 1040NR, not Form 1040EZ or Form 1040NR-EZ, and meet all the following tests. Tax planning us 1040a The care must be for one or more qualifying persons who are identified on Form 2441. Tax planning us 1040a (See Qualifying Person Test. Tax planning us 1040a ) You (and your spouse if filing jointly) must have earned income during the year. Tax planning us 1040a (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. Tax planning us 1040a ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. Tax planning us 1040a (See Work-Related Expense Test, later. Tax planning us 1040a ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. Tax planning us 1040a If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. Tax planning us 1040a You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. Tax planning us 1040a See Payments to Relatives or Dependents under Work-Related Expense Test, later. Tax planning us 1040a Your filing status may be single, head of household, or qualifying widow(er) with dependent child. Tax planning us 1040a If you are married, you must file a joint return, unless an exception applies to you. Tax planning us 1040a See Joint Return Test, later. Tax planning us 1040a You must identify the care provider on your tax return. Tax planning us 1040a (See Provider Identification Test, later. Tax planning us 1040a ) If you exclude or deduct dependent care benefits provided by a dependent care benefit plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). Tax planning us 1040a (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. Tax planning us 1040a See Reduced Dollar Limit under How To Figure the Credit, later. Tax planning us 1040a ) These tests are presented in Figure A and are also explained in detail in this publication. Tax planning us 1040a Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. Tax planning us 1040a A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart , later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Tax planning us 1040a Dependent defined. Tax planning us 1040a   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. Tax planning us 1040a To be your dependent, a person must be your qualifying child (or your qualifying relative). Tax planning us 1040a Qualifying child. Tax planning us 1040a   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. Tax planning us 1040a More information. Tax planning us 1040a   For more information about who is a dependent or a qualifying child, see Publication 501. Tax planning us 1040a Physically or mentally not able to care for oneself. Tax planning us 1040a   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. Tax planning us 1040a Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. Tax planning us 1040a Person qualifying for part of year. Tax planning us 1040a   You determine a person's qualifying status each day. Tax planning us 1040a For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. Tax planning us 1040a Also see Yearly limit under Dollar Limit, later. Tax planning us 1040a Birth or death of otherwise qualifying person. Tax planning us 1040a   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home more than half the time he or she was alive in 2013. Tax planning us 1040a Taxpayer identification number. Tax planning us 1040a   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). Tax planning us 1040a If the correct information is not shown, the credit may be reduced or disallowed. Tax planning us 1040a Individual taxpayer identification number (ITIN) for aliens. Tax planning us 1040a   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. Tax planning us 1040a The ITIN is entered wherever an SSN is requested on a tax return. Tax planning us 1040a If the alien does not have an ITIN, he or she must apply for one. Tax planning us 1040a See Form W-7, Application for IRS Individual Taxpayer Identification Number, for details. Tax planning us 1040a   An ITIN is for tax use only. Tax planning us 1040a It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. Tax planning us 1040a S. Tax planning us 1040a law. Tax planning us 1040a Adoption taxpayer identification number (ATIN). Tax planning us 1040a   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. Tax planning us 1040a File Form W-7A, Application for Taxpayer Identification Number for Pending U. Tax planning us 1040a S. Tax planning us 1040a Adoptions. Tax planning us 1040a Child of divorced or separated parents or parents living apart. Tax planning us 1040a   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. Tax planning us 1040a   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. Tax planning us 1040a If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. Tax planning us 1040a For details and an exception for a parent who works at night, see Publication 501. Tax planning us 1040a   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. Tax planning us 1040a Please click here for the text description of the image. Tax planning us 1040a Figure a. Tax planning us 1040a Can you claim the credit Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. Tax planning us 1040a Earned income. Tax planning us 1040a   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. Tax planning us 1040a A net loss from self-employment reduces earned income. Tax planning us 1040a Earned income also includes strike benefits and any disability pay you report as wages. Tax planning us 1040a   Generally, only taxable compensation is included. Tax planning us 1040a However, you can elect to include nontaxable combat pay in earned income. Tax planning us 1040a If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. Tax planning us 1040a (In other words, if one of you makes the election, the other one can also make it but does not have to. Tax planning us 1040a ) Including this income will give you a larger credit only if your (or your spouse's) other earned income is less than the amount entered on line 3 of Form 2441. Tax planning us 1040a You should figure your credit both ways and make the election if it gives you a greater tax benefit. Tax planning us 1040a    You can choose to include your nontaxable combat pay in earned income when figuring your credit for child and dependent care expenses, even if you choose not to include it in earned income for the earned income credit or the exclusion or deduction for dependent care benefits. Tax planning us 1040a Members of certain religious faiths opposed to social security. Tax planning us 1040a   This section is for persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes. Tax planning us 1040a These forms are: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, and Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits, for use by members of recognized religious groups. Tax planning us 1040a   Each form is discussed here in terms of what is or is not earned income for purposes of the child and dependent care credit. Tax planning us 1040a For information on the use of these forms, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Tax planning us 1040a Form 4361. Tax planning us 1040a   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee are earned income. Tax planning us 1040a This includes wages, salaries, tips, and other taxable employee compensation. Tax planning us 1040a   However, amounts you received for ministerial duties, but not as an employee, do not count as earned income. Tax planning us 1040a Examples include fees for performing marriages and honoraria for delivering speeches. Tax planning us 1040a   Any amount you received for work that is not related to your ministerial duties is earned income. Tax planning us 1040a Form 4029. Tax planning us 1040a   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation are earned income. Tax planning us 1040a   However, amounts you received as a self-employed individual do not count as earned income. Tax planning us 1040a What is not earned income?   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarships or fellowship grants, except for those reported on Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received, Income of a nonresident alien that is not effectively connected with a U. Tax planning us 1040a S. Tax planning us 1040a trade or business, or Any amount received for work while an inmate in a penal institution. Tax planning us 1040a Rule for student-spouse or spouse not able to care for self. Tax planning us 1040a   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. Tax planning us 1040a (Your spouse also must live with you for more than half the year. Tax planning us 1040a )   If you are filing a joint return, this rule also applies to you. Tax planning us 1040a You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. Tax planning us 1040a   Figure the earned income of the nonworking spouse, described under (1) or (2) above, as shown under Earned Income Limit under How To Figure the Credit, later. Tax planning us 1040a   This rule applies to only one spouse for any one month. Tax planning us 1040a If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. Tax planning us 1040a Full-time student. Tax planning us 1040a    You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. Tax planning us 1040a You must have been a full-time student for some part of each of 5 calendar months during the year. Tax planning us 1040a (The months need not be consecutive. Tax planning us 1040a ) School. Tax planning us 1040a   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. Tax planning us 1040a A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. Tax planning us 1040a Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. Tax planning us 1040a Expenses are considered work-related only if both of the following are true. Tax planning us 1040a They allow you (and your spouse if filing jointly) to work or look for work. Tax planning us 1040a They are for a qualifying person's care. Tax planning us 1040a Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. Tax planning us 1040a If you are married, generally both you and your spouse must work or look for work. Tax planning us 1040a One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. Tax planning us 1040a Your work can be for others or in your own business or partnership. Tax planning us 1040a It can be either full time or part time. Tax planning us 1040a Work also includes actively looking for work. Tax planning us 1040a However, if you do not find a job and have no earned income for the year, you cannot take this credit. Tax planning us 1040a See Earned Income Test, earlier. Tax planning us 1040a An expense is not considered work-related merely because you had it while you were working. Tax planning us 1040a The purpose of the expense must be to allow you to work. Tax planning us 1040a Whether your expenses allow you to work or look for work depends on the facts. Tax planning us 1040a Example 1. Tax planning us 1040a The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. Tax planning us 1040a Example 2. Tax planning us 1040a You work during the day. Tax planning us 1040a Your spouse works at night and sleeps during the day. Tax planning us 1040a You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. Tax planning us 1040a Your expenses are considered work-related. Tax planning us 1040a Volunteer work. Tax planning us 1040a   For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. Tax planning us 1040a Work for part of year. Tax planning us 1040a   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. Tax planning us 1040a 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. Tax planning us 1040a 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 (2½ months × $250). Tax planning us 1040a Temporary absence from work. Tax planning us 1040a   You do not 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. Tax planning us 1040a Instead, you can figure your credit including the expenses you paid for the period of absence. Tax planning us 1040a   An absence of 2 weeks or less is a short, temporary absence. Tax planning us 1040a An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. Tax planning us 1040a Example. Tax planning us 1040a You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. Tax planning us 1040a You become ill and miss 4 months of work but receive sick pay. Tax planning us 1040a You continue to pay the nanny to care for the children while you are ill. Tax planning us 1040a Your absence is not a short, temporary absence, and your expenses are not considered work-related. Tax planning us 1040a Part-time work. Tax planning us 1040a   If you work part-time, you generally must figure your expenses for each day. Tax planning us 1040a 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 did not work. Tax planning us 1040a Any day when you work at least 1 hour is a day of work. Tax planning us 1040a Example 1. Tax planning us 1040a You work 3 days a week. Tax planning us 1040a While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. Tax planning us 1040a You can pay the center $150 for any 3 days a week or $250 for 5 days a week. Tax planning us 1040a Your child attends the center 5 days a week. Tax planning us 1040a Your work-related expenses are limited to $150 a week. Tax planning us 1040a Example 2. Tax planning us 1040a The facts are the same as in Example 1 except the center does not offer a 3-day option. Tax planning us 1040a The entire $250 weekly fee may be a work-related expense. Tax planning us 1040a Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. Tax planning us 1040a You do not have to choose the least expensive way of providing the care. Tax planning us 1040a The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. Tax planning us 1040a Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. Tax planning us 1040a Expenses for household services qualify if part of the services is for the care of qualifying persons. Tax planning us 1040a See Household Services, later. Tax planning us 1040a Expenses not for care. Tax planning us 1040a   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. Tax planning us 1040a However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. Tax planning us 1040a Otherwise, see the discussion of Expenses partly work-related, later. Tax planning us 1040a   Child support payments are not for care and do not qualify for the credit. Tax planning us 1040a Education. Tax planning us 1040a   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. Tax planning us 1040a   Expenses to attend kindergarten or a higher grade are not expenses for care. Tax planning us 1040a Do not use these expenses to figure your credit. Tax planning us 1040a   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. Tax planning us 1040a   Summer school and tutoring programs are not for care. Tax planning us 1040a Example 1. Tax planning us 1040a You take your 3-year-old child to a nursery school that provides lunch and a few educational activities as part of its preschool childcare service. Tax planning us 1040a The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. Tax planning us 1040a You can count the total cost when you figure the credit. Tax planning us 1040a Example 2. Tax planning us 1040a You place your 10-year-old child in a boarding school so you can work full time. Tax planning us 1040a Only the part of the boarding school expense that is for the care of your child is a work-related expense. Tax planning us 1040a You can count that part of the expense in figuring your credit if it can be separated from the cost of education. Tax planning us 1040a You cannot count any part of the amount you pay the school for your child's education. Tax planning us 1040a Care outside your home. Tax planning us 1040a   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. Tax planning us 1040a Dependent care center. Tax planning us 1040a   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. Tax planning us 1040a   A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. Tax planning us 1040a Camp. Tax planning us 1040a   The cost of sending your child to an overnight camp is not considered a work-related expense. Tax planning us 1040a    The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. Tax planning us 1040a Transportation. Tax planning us 1040a   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. Tax planning us 1040a This includes transportation by bus, subway, taxi, or private car. Tax planning us 1040a However, transportation not provided by a care provider is not for the care of a qualifying person. Tax planning us 1040a Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. Tax planning us 1040a Fees and deposits. Tax planning us 1040a   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. Tax planning us 1040a However, a forfeited deposit is not for the care of a qualifying person if care is not provided. Tax planning us 1040a Example 1. Tax planning us 1040a You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. Tax planning us 1040a The fee you paid is a work-related expense. Tax planning us 1040a Example 2. Tax planning us 1040a You placed a deposit with a preschool to reserve a place for your 3-year-old child. Tax planning us 1040a You later sent your child to a different preschool and forfeited the deposit. Tax planning us 1040a The forfeited deposit is not for care and so is not a work-related expense. Tax planning us 1040a Household Services Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. Tax planning us 1040a Definition. Tax planning us 1040a   Household services are ordinary and usual services done in and around your home that are necessary to run your home. Tax planning us 1040a They include the services of a housekeeper, maid, or cook. Tax planning us 1040a However, they do not include the services of a chauffeur, bartender, or gardener. Tax planning us 1040a Housekeeper. Tax planning us 1040a   In this publication, the term housekeeper refers to any household employee whose services include the care of a qualifying person. Tax planning us 1040a Expenses partly work-related. Tax planning us 1040a   If part of an expense is work-related (for either household services or the care of a qualifying person) and part is for other purposes, you have to divide the expense. Tax planning us 1040a To figure your credit, count only the part that is work-related. Tax planning us 1040a However, you do not have to divide the expense if only a small part is for other purposes. Tax planning us 1040a Example. Tax planning us 1040a You pay a housekeeper to care for your 9-year-old and 15-year-old children so you can work. Tax planning us 1040a The housekeeper spends most of the time doing normal household work and spends 30 minutes a day driving you to and from work. Tax planning us 1040a You do not have to divide the expenses. Tax planning us 1040a You can treat the entire expense of the housekeeper as work-related because the time spent driving is minimal. Tax planning us 1040a Nor do you have to divide the expenses between the two children, even though the expenses are partly for the 15-year-old child who is not a qualifying person, because the expense is also partly for the care of your 9-year-old child, who is a qualifying person. Tax planning us 1040a However, the dollar limit (discussed later) is based on one qualifying person, not two. Tax planning us 1040a Meals and lodging provided for housekeeper. Tax planning us 1040a   If you have expenses for meals that your housekeeper eats in your home because of his or her employment, count these as work-related expenses. Tax planning us 1040a If you have extra expenses for providing lodging in your home to the housekeeper, count these as work-related expenses also. Tax planning us 1040a Example. Tax planning us 1040a To provide lodging to the housekeeper, you move to an apartment with an extra bedroom. Tax planning us 1040a You can count the extra rent and utility expenses for the housekeeper's bedroom as work-related. Tax planning us 1040a However, if your housekeeper moves into an existing bedroom in your home, you can count only the extra utility expenses as work-related. Tax planning us 1040a Taxes paid on wages. Tax planning us 1040a   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. Tax planning us 1040a For more information on a household employer's tax responsibilities, see Employment Taxes for Household Employers, later. Tax planning us 1040a Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. Tax planning us 1040a However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. Tax planning us 1040a Joint Return Test Generally, married couples must file a joint return to take the credit. Tax planning us 1040a However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Tax planning us 1040a Legally separated. Tax planning us 1040a   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. Tax planning us 1040a You may be eligible to take the credit on your return using head of household filing status. Tax planning us 1040a Married and living apart. Tax planning us 1040a   You are not considered married and are eligible to take the credit if all the following apply. Tax planning us 1040a You file a return apart from your spouse. Tax planning us 1040a Your home is the home of a qualifying person for more than half the year. Tax planning us 1040a You pay more than half the cost of keeping up your home for the year. Tax planning us 1040a Your spouse does not live in your home for the last 6 months of the year. Tax planning us 1040a Costs of keeping up a home. Tax planning us 1040a   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. Tax planning us 1040a   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. Tax planning us 1040a   They also do not include the purchase, permanent improvement, or replacement of property. Tax planning us 1040a For example, you cannot include the cost of replacing a water heater. Tax planning us 1040a However, you can include the cost of repairing a water heater. Tax planning us 1040a Death of spouse. Tax planning us 1040a   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. Tax planning us 1040a If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's own return. Tax planning us 1040a Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. Tax planning us 1040a Use Form 2441, Part I, to show the information. Tax planning us 1040a If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). Tax planning us 1040a Information needed. Tax planning us 1040a   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. Tax planning us 1040a    If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. Tax planning us 1040a If the care provider is an organization, then it is the employer identification number (EIN). Tax planning us 1040a   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). Tax planning us 1040a In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. Tax planning us 1040a   If you cannot provide all of the information or the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. Tax planning us 1040a Getting the information. Tax planning us 1040a    You can use Form W-10, Dependent Care Provider's Identification and Certification, to request the required information from the care provider. Tax planning us 1040a If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10, including: A copy of the provider's social security card, A copy of the provider's completed Form W-4, Employee's Withholding Allowance Certificate, if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the necessary information. Tax planning us 1040a    You should keep this information with your tax records. Tax planning us 1040a Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. Tax planning us 1040a Due diligence. Tax planning us 1040a   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. Tax planning us 1040a However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. Tax planning us 1040a   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. Tax planning us 1040a Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. Tax planning us 1040a Provider refusal. Tax planning us 1040a    If the provider refuses to give you the identifying information, you should report on Form 2441 whatever information you have (such as the name and address). Tax planning us 1040a Enter “See Attached Statement” in the columns calling for the information you do not have. Tax planning us 1040a Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. Tax planning us 1040a Be sure to write your name and social security number on this statement. Tax planning us 1040a The statement will show that you used due diligence in trying to furnish the necessary information. Tax planning us 1040a U. Tax planning us 1040a S. Tax planning us 1040a citizens and resident aliens living abroad. Tax planning us 1040a   If you are living abroad, your care provider may not have, and may not be required to get, a U. Tax planning us 1040a S. Tax planning us 1040a taxpayer identification number (for example, an SSN or an EIN). Tax planning us 1040a If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. Tax planning us 1040a How To Figure the Credit Your credit is a percentage of your work-related expenses. Tax planning us 1040a Your expenses are subject to the earned income limit and the dollar limit. Tax planning us 1040a The percentage is based on your adjusted gross income. Tax planning us 1040a Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. Tax planning us 1040a Expenses prepaid in an earlier year. Tax planning us 1040a   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. Tax planning us 1040a Claim the expenses for the later year as if they were actually paid in that later year. Tax planning us 1040a Expenses not paid until the following year. Tax planning us 1040a   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. Tax planning us 1040a You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. Tax planning us 1040a See Payments for prior year's expenses under Amount of Credit, later. Tax planning us 1040a If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. Tax planning us 1040a You may be able to claim a credit for them on your 2014 return. Tax planning us 1040a Expenses reimbursed. Tax planning us 1040a   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. Tax planning us 1040a Example. Tax planning us 1040a You paid work-related expenses of $3,000. Tax planning us 1040a You are reimbursed $2,000 by a state social services agency. Tax planning us 1040a You can use only $1,000 to figure your credit. Tax planning us 1040a Medical expenses. Tax planning us 1040a   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. Tax planning us 1040a You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. Tax planning us 1040a   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. Tax planning us 1040a However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. Tax planning us 1040a For information on medical expenses, see Publication 502, Medical and Dental Expenses. Tax planning us 1040a    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. Tax planning us 1040a Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. Tax planning us 1040a See Reduced Dollar Limit, later. Tax planning us 1040a But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. Tax planning us 1040a Dependent care benefits. Tax planning us 1040a    Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. Tax planning us 1040a Your salary may have been reduced to pay for these benefits. Tax planning us 1040a If you received benefits as an employee, they should be shown in box 10 of your Form W-2, Wage and Tax Statement. Tax planning us 1040a See Statement for employee, later. Tax planning us 1040a Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. Tax planning us 1040a   Enter the amount of these benefits on Form 2441, Part III, line 12. Tax planning us 1040a Exclusion or deduction. Tax planning us 1040a   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Tax planning us 1040a Your employer can tell you whether your benefit plan qualifies. Tax planning us 1040a To claim the exclusion, you must complete Part III of Form 2441. Tax planning us 1040a You cannot use Form 1040EZ. Tax planning us 1040a   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. Tax planning us 1040a Therefore, you would not get an exclusion from wages. Tax planning us 1040a Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. Tax planning us 1040a To claim the deduction, you must use Form 2441. Tax planning us 1040a   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Tax planning us 1040a   The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. Tax planning us 1040a    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. Tax planning us 1040a Statement for employee. Tax planning us 1040a   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Tax planning us 1040a Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. Tax planning us 1040a Effect of exclusion on credit. Tax planning us 1040a   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. Tax planning us 1040a Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year, if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. Tax planning us 1040a Earned income for the purpose of figuring the credit is defined under Earned Income Test, earlier. Tax planning us 1040a For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. Tax planning us 1040a Example. Tax planning us 1040a You remarried on December 3. Tax planning us 1040a Your earned income for the year was $18,000. Tax planning us 1040a Your new spouse's earned income for the year was $2,000. Tax planning us 1040a You paid work-related expenses of $3,000 for the care of your 5-year-old child and qualified to claim the credit. Tax planning us 1040a The amount of expenses you use to figure your credit cannot be more than $2,000 (the smaller of your earned income or that of your spouse). Tax planning us 1040a Separated spouse. Tax planning us 1040a   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test, earlier), you are not considered married for purposes of the earned income limit. Tax planning us 1040a Use only your income in figuring the earned income limit. Tax planning us 1040a Surviving spouse. Tax planning us 1040a   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. Tax planning us 1040a Community property laws. Tax planning us 1040a   Disregard community property laws when you figure earned income for this credit. Tax planning us 1040a Self-employment earnings. Tax planning us 1040a   If you are self-employed, include your net earnings in earned income. Tax planning us 1040a For purposes of the child and dependent care credit, net earnings from self-employment generally means the amount from Schedule SE (either Section A or Section B), line 3, minus any deduction for self-employment tax on Form 1040 or Form 1040NR, line 27. Tax planning us 1040a Include your self-employment earnings in earned income, even if they are less than $400 and you did not file Schedule SE. Tax planning us 1040a Clergy or church employee. Tax planning us 1040a   If you are a member of the clergy or a church employee, see the Instructions for Form 2441 for details. Tax planning us 1040a Statutory employee. Tax planning us 1040a   If you filed Schedule C (Form 1040) or C-EZ (Form 1040) to report income as a statutory employee, also include as earned income the amount from line 1 of that Schedule C (Form 1040) or C-EZ (Form 1040). Tax planning us 1040a Net loss. Tax planning us 1040a   You must reduce your earned income by any net loss from self-employment. Tax planning us 1040a Optional method if earnings are low or a net loss. Tax planning us 1040a   If your net earnings from self-employment are low or you have a net loss, you may be able to figure your net earnings by using an optional method instead of the regular method. Tax planning us 1040a Get Publication 334, Tax Guide for Small Business, for details. Tax planning us 1040a If you use an optional method to figure net earnings for self-employment tax purposes, include those net earnings in your earned income for this credit. Tax planning us 1040a In this case, subtract any deduction you claimed on Form 1040 or Form 1040NR, line 27, from the total of the amounts on Schedule SE, Section B, lines 3 and 4b, to figure your net earnings. Tax planning us 1040a You or your spouse is a student or not able to care for self. Tax planning us 1040a   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. Tax planning us 1040a His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. Tax planning us 1040a Spouse works. Tax planning us 1040a   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. Tax planning us 1040a Spouse qualifies for part of month. Tax planning us 1040a   If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. Tax planning us 1040a You are a student or not able to care for self. Tax planning us 1040a   These rules also apply if you are a student or not able to care for yourself and are filing a joint return. Tax planning us 1040a For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). Tax planning us 1040a If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. Tax planning us 1040a Both spouses qualify. Tax planning us 1040a   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. Tax planning us 1040a Example. Tax planning us 1040a Jim works and keeps up a home for himself and his wife Sharon. Tax planning us 1040a Because of an accident, Sharon is not able to care for herself for 11 months during the tax year. Tax planning us 1040a During the 11 months, Jim pays $3,300 of work-related expenses for Sharon's care. Tax planning us 1040a These expenses also qualify as medical expenses. Tax planning us 1040a Their adjusted gross income is $29,000 and the entire amount is Jim's earned income. Tax planning us 1040a Jim and Sharon's earned income limit is the smallest of the following amounts. Tax planning us 1040a   Jim and Sharon's Earned Income Limit   1) Work-related expenses Jim paid $   3,300   2) Jim's earned income $   29,000   3) Income considered earned by Sharon (11 × $250) $    2,750   Jim and Sharon can use $2,750 to figure the credit and treat the balance of $550 ($3,300 − $2,750) as a medical expense. Tax planning us 1040a However, if they use the $3,300 first as a medical expense, they cannot use any part of that amount to figure the credit. Tax planning us 1040a Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. Tax planning us 1040a This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. Tax planning us 1040a If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. Tax planning us 1040a This limit does not need to be divided equally among them. Tax planning us 1040a For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. Tax planning us 1040a Yearly limit. Tax planning us 1040a   The dollar limit is a yearly limit. Tax planning us 1040a The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. Tax planning us 1040a Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. Tax planning us 1040a Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. Tax planning us 1040a Example 1. Tax planning us 1040a You pay $500 a month for after-school care for your son. Tax planning us 1040a He turned 13 on May 1 and is no longer a qualifying person. Tax planning us 1040a You can use the $2,000 of expenses for his care January through April to figure your credit because it is not more than the $3,000 yearly limit. Tax planning us 1040a Example 2. Tax planning us 1040a In July of this year, to permit your spouse to begin a new job, you enrolled your 3-year-old daughter in a nursery school that provides preschool childcare. Tax planning us 1040a You paid $300 per month for the childcare. Tax planning us 1040a You can use the full $1,800 you paid ($300 × 6 months) as qualified expenses because it is not more than the $3,000 yearly limit. Tax planning us 1040a Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. Tax planning us 1040a Your reduced dollar limit is figured on Form 2441, Part III. Tax planning us 1040a See Dependent Care Benefits, earlier, for information on excluding or deducting these benefits. Tax planning us 1040a Example 1. Tax planning us 1040a George is a widower with one child and earns $24,000 a year. Tax planning us 1040a He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. Tax planning us 1040a His employer pays an additional $1,000 under a qualified dependent care benefit plan. Tax planning us 1040a This $1,000 is excluded from George's income. Tax planning us 1040a Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. Tax planning us 1040a This is because his dollar limit is reduced as shown next. Tax planning us 1040a   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. Tax planning us 1040a Randall is married and both he and his wife are employed. Tax planning us 1040a Each has earned income in excess of $6,000. Tax planning us 1040a They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. Tax planning us 1040a Randall's work-related expenses are $6,000 for the year. Tax planning us 1040a Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. Tax planning us 1040a Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. Tax planning us 1040a Although the dollar limit for his work-related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. Tax planning us 1040a This is because his dollar limit is reduced as shown next. Tax planning us 1040a   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits selected from employer's cafeteria plan and  excluded from Randall's income −5,000 3) Reduced dollar limit on work-related expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. Tax planning us 1040a This percentage depends on your adjusted gross income shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Tax planning us 1040a The following table shows the percentage to use based on adjusted gross income. Tax planning us 1040a   IF your adjusted gross income is: THEN the       Over:       But not over:   percentage is:       $0   —   $15,000   35%       15,000   —   17,000   34%       17,000   —   19,000   33%       19,000   —   21,000   32%       21,000   —   23,000   31%       23,000   —   25,000   30%       25,000   —   27,000   29%       27,000   —   29,000   28%       29,000   —   31,000   27%       31,000   —   33,000   26%       33,000   —   35,000   25%       35,000   —   37,000   24%       37,000   —   39,000   23%       39,000   —   41,000   22%       41,000   —   43,000   21%       43,000   —   No limit   20%   To qualify for the credit, you must have one or more qualifying persons. Tax planning us 1040a You should show the expenses for each person on Form 2441, line 2, column (c). Tax planning us 1040a However, it is possible a qualifying person could have no expenses and a second qualifying person could have expenses exceeding $3,000. Tax planning us 1040a You should list -0- for the one person and the actual amount for the second person. Tax planning us 1040a The $6,000 limit that applies to two or more qualifying persons would still be used to compute your credit unless you already excluded or deducted, in Part III of Form 2441, certain dependent care benefits paid to you (or on your behalf) by your employer. Tax planning us 1040a Example. Tax planning us 1040a Roger and Megan Paris have two qualifying children. Tax planning us 1040a They received $1,000 of dependent care benefits from Megan's employer during 2013, but they incurred a total of $19,500 of child and dependent care expenses. Tax planning us 1040a They complete Part III of Form 2441 to exclude the $1,000 from their taxable income (offsetting $1,000 of their expenses). Tax planning us 1040a Roger and Megan continue to line 27 to figure their credit using the remaining $18,500 of expenses. Tax planning us 1040a Line 30 tells them to complete line 2 without including any dependent care benefits. Tax planning us 1040a They complete line 2 of Form 2441, listing both Susan and James, as shown in the Line 2 example above. Tax planning us 1040a Line 2 Example (a) Qualifying person's name (b) Qualifying person's social security number (c) Qualified expenses you incurred and paid in 2013 for the person listed in column (a) First Last Susan Paris 123-00-6789 -0- James Paris 987-00-4321 18,500. Tax planning us 1040a 00 All of Susan's expenses were covered by the $1,000 of employer-provided dependent care benefits. Tax planning us 1040a However, their son James has special needs and they paid $18,500 for his care. Tax planning us 1040a Line 3 imposes a $5,000 limit for two or more children ($6,000 limit, minus $1,000 already excluded from income = $5,000) and Roger and Megan continue to complete the form. Tax planning us 1040a Even though line 2 indicates one of the Paris children did not have any dependent care expenses, it does not change the fact that they had two qualifying children for the purposes of Form 2441. Tax planning us 1040a Payments for prior year's expenses. Tax planning us 1040a   If you had work-related expenses in 2012 that you paid in 2013, you may be able to increase the credit on your 2013 return. Tax planning us 1040a Attach a statement to your form showing how you figured the additional amount from 2012. Tax planning us 1040a Then enter “CPYE” (Credit for Prior Year Expenses) and the amount of the credit on the dotted line next to line 9 on Form 2441. Tax planning us 1040a Also enter the name and taxpayer identification number of the person for whom you paid the prior year's expenses. Tax planning us 1040a Then add this credit to the amount on line 9, and replace the amount on line 9 with the total. Tax planning us 1040a See Worksheet A. Tax planning us 1040a Example. Tax planning us 1040a In 2012, Sam and Kate had childcare expenses of $2,600 for their 12-year-old child. Tax planning us 1040a Of the $2,600, they paid $2,000 in 2012 and $600 in 2013. Tax planning us 1040a Their adjusted gross income for 2012 was $30,000. Tax planning us 1040a Sam's earned income of $14,000 was less than Kate's earned income. Tax planning us 1040a A credit for their 2012 expenses paid in 2013 is not allowed in 2012. Tax planning us 1040a It is allowed for the 2013 tax year, but they must use their adjusted gross income for 2012 to compute the amount. Tax planning us 1040a The filled-in Worksheet A they used to figure this credit is shown later. Tax planning us 1040a Sam and Kate add the $162 from line 13 of this worksheet to their 2013 credit and enter the total on their Form 2441, line 9. Tax planning us 1040a They enter “CPYE $162” and their child's name and SSN in the space to the left of line 9. Tax planning us 1040a Worksheet A. Tax planning us 1040a Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. Tax planning us 1040a 1. Tax planning us 1040a   Enter your 2012 qualified expenses paid in 2012 1. Tax planning us 1040a     2. Tax planning us 1040a   Enter your 2012 qualified expenses paid in 2013 2. Tax planning us 1040a     3. Tax planning us 1040a   Add the amounts on lines 1 and 2 3. Tax planning us 1040a     4. Tax planning us 1040a   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. Tax planning us 1040a     5. Tax planning us 1040a   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. Tax planning us 1040a     6. Tax planning us 1040a   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. Tax planning us 1040a     7. Tax planning us 1040a   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. Tax planning us 1040a     8. Tax planning us 1040a   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. Tax planning us 1040a     9. Tax planning us 1040a   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. Tax planning us 1040a     10. Tax planning us 1040a   Subtract the amount on line 9 from the amount on line 8 and enter the result. Tax planning us 1040a If zero or less, stop here. Tax planning us 1040a You cannot increase your 2013 credit by any previous year's expenses 10. Tax planning us 1040a     11. Tax planning us 1040a   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. Tax planning us 1040a     12. Tax planning us 1040a   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. Tax planning us 1040a             IF your 2012 adjusted gross income is:   THEN the decimal                 Over:   But not over:     amount is:                 $0 — $15,000     . Tax planning us 1040a 35                 15,000 — 17,000     . Tax planning us 1040a 34                 17,000 — 19,000     . Tax planning us 1040a 33                 19,000 — 21,000     . Tax planning us 1040a 32                 21,000 — 23,000     . Tax planning us 1040a 31                 23,000 — 25,000     . Tax planning us 1040a 30                 25,000 — 27,000     . Tax planning us 1040a 29                 27,000 — 29,000     . Tax planning us 1040a 28                 29,000 — 31,000     . Tax planning us 1040a 27                 31,000 — 33,000     . Tax planning us 1040a 26                 33,000 — 35,000     . Tax planning us 1040a 25                 35,000 — 37,000     . Tax planning us 1040a 24                 37,000 — 39,000     . Tax planning us 1040a 23                 39,000 — 41,000     . Tax planning us 1040a 22                 41,000 — 43,000     . Tax planning us 1040a 21                 43,000 — No limit     . Tax planning us 1040a 20           13. Tax planning us 1040a   Multiply line 10 by line 12. Tax planning us 1040a Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. Tax planning us 1040a Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses           Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. Tax planning us 1040a       Worksheet A. Tax planning us 1040a Filled-in Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. Tax planning us 1040a 1. Tax planning us 1040a   Enter your 2012 qualified expenses paid in 2012 1. Tax planning us 1040a   $2,000 2. Tax planning us 1040a   Enter your 2012 qualified expenses paid in 2013 2. Tax planning us 1040a   600 3. Tax planning us 1040a   Add the amounts on lines 1 and 2 3. Tax planning us 1040a   2,600 4. Tax planning us 1040a   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. Tax planning us 1040a   3,000 5. Tax planning us 1040a   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. Tax planning us 1040a   0 6. Tax planning us 1040a   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. Tax planning us 1040a   3,000 7. Tax planning us 1040a   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. Tax planning us 1040a   14,000 8. Tax planning us 1040a   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. Tax planning us 1040a   2,600 9. Tax planning us 1040a   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. Tax planning us 1040a   2,000 10. Tax planning us 1040a   Subtract the amount on line 9 from the amount on line 8 and enter the result. Tax planning us 1040a If zero or less, stop here. Tax planning us 1040a You cannot increase your 2013 credit by any previous year's expenses 10. Tax planning us 1040a   600 11. Tax planning us 1040a   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. Tax planning us 1040a   30,000 12. Tax planning us 1040a   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. Tax planning us 1040a   . Tax planning us 1040a 27         IF your 2012 adjusted gross income is:   THEN the decimal                 Over   But not over     amount is:                 $0 — $15,000     . Tax planning us 1040a 35                 15,000 — 17,000     . Tax planning us 1040a 34                 17,000 — 19,000     . Tax planning us 1040a 33                 19,000 — 21,000     . Tax planning us 1040a 32                 21,000 — 23,000     . Tax planning us 1040a 31                 23,000 — 25,000     . Tax planning us 1040a 30                 25,000 — 27,000     . Tax planning us 1040a 29                 27,000 — 29,000     . Tax planning us 1040a 28                 29,000 — 31,000     . Tax planning us 1040a 27                 31,000 — 33,000     . Tax planning us 1040a 26                 33,000 — 35,000     . Tax planning us 1040a 25                 35,000 — 37,000     . Tax planning us 1040a 24                 37,000 — 39,000     . Tax planning us 1040a 23                 39,000 — 41,000     . Tax planning us 1040a 22                 41,000 — 43,000     . Tax planning us 1040a 21                 43,000 — No limit     . Tax planning us 1040a 20           13. Tax planning us 1040a   Multiply line 10 by line 12. Tax planning us 1040a Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. Tax planning us 1040a Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses             Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. Tax planning us 1040a   $162   How To Claim the Credit To claim the credit, you can file Form 1040, Form 1040A, or Form 1040NR. Tax planning us 1040a You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. Tax planning us 1040a Form 1040, Form 1040A, or Form 1040NR. Tax planning us 1040a    You must complete Form 2441 and attach it to your Form 1040, Form 1040A, or Form 1040NR. Tax planning us 1040a Enter the credit on your Form 1040, line 48; Form 1040A, line 29; or Form 1040NR, line 46. Tax planning us 1040a Limit on credit. Tax planning us 1040a    The amount of credit you can claim is limited to your tax. Tax planning us 1040a For more information, see the Instructions for Form 2441. Tax planning us 1040a Tax credit not refundable. Tax planning us 1040a   You cannot get a refund for any part of the credit that is more than this limit. Tax planning us 1040a Recordkeeping. Tax planning us 1040a You should keep records of your work-related expenses. Tax planning us 1040a Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and length of the disability. Tax planning us 1040a Other records you should keep to support your claim for the credit are described under Provider Identification Test, earlier. Tax planning us 1040a Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. Tax planning us 1040a If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. Tax planning us 1040a If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. Tax planning us 1040a Self-employed persons who are in business for themselves are not household employees. Tax planning us 1040a Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. Tax planning us 1040a If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. Tax planning us 1040a This control could include providing rules of conduct and appearance and requiring regular reports. Tax planning us 1040a In this case, you do not have to pay employment taxes. Tax planning us 1040a But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. Tax planning us 1040a If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. Tax planning us 1040a Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. Tax planning us 1040a Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. Tax planning us 1040a Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. Tax planning us 1040a For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. Tax planning us 1040a State employment tax. Tax planning us 1040a   You may also have to pay state unemployment tax. Tax planning us 1040a Contact your state unemployment tax office for information. Tax planning us 1040a You should also find out whether you need to pay or collect other state employment taxes or carry worker's compensation insurance. Tax planning us 1040a For a list of state unemployment tax agencies, visit the U. Tax planning us 1040a S. Tax planning us 1040a Department of Labor's website. Tax planning us 1040a To find that website, use the link in Publication 926 or search online. Tax planning us 1040a How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Tax planning us 1040a Free help with your tax return. Tax planning us 1040a   You can get free help preparing your return nationwide from IRS-certified volunteers. Tax planning us 1040a The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Tax planning us 1040a The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Tax planning us 1040a Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Tax planning us 1040a In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Tax planning us 1040a To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Tax planning us 1040a gov, download the IRS2Go app, or call 1-800-906-9887. Tax planning us 1040a   As part of the TCE program, AARP offers the Tax-Aide counseling program. Tax planning us 1040a To find the nearest AARP Tax-Aide site, visit AARP's website at www. Tax planning us 1040a aarp. Tax planning us 1040a org/money/taxaide or call 1-888-227-7669. Tax planning us 1040a For more information on these programs, go to IRS. Tax planning us 1040a gov and enter “VITA” in the search box. Tax planning us 1040a Internet. Tax planning us 1040a    IRS. Tax planning us 1040a gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Tax planning us 1040a Download the free IRS2Go app from the iTunes app store or from Google Play. Tax planning us 1040a Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Tax planning us 1040a Check the status of your 2013 refund with the Where's My Refund? application on IRS. Tax planning us 1040a gov or download the IRS2Go app and select the Refund Status option. Tax planning us 1040a The IRS issues more than 9 out of 10 refunds in less than 21 days. Tax planning us 1040a Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Tax planning us 1040a You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Tax planning us 1040a The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Tax planning us 1040a Use the Interactive Tax Assistant (ITA) to research your tax questions. Tax planning us 1040a No need to wait on the phone or stand in line. Tax planning us 1040a The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Tax planning us 1040a When you reach the response screen, you can print the entire interview and the final response for your records. Tax planning us 1040a New subject areas are added on a regular basis. Tax planning us 1040a  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Tax planning us 1040a gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Tax planning us 1040a You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Tax planning us 1040a The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Tax planning us 1040a When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Tax planning us 1040a Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Tax planning us 1040a You can also ask the IRS to mail a return or an account transcript to you. Tax planning us 1040a Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Tax planning us 1040a gov or by calling 1-800-908-9946. Tax planning us 1040a Tax return and tax account transcripts are generally available for the current year and the past three years. Tax planning us 1040a Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Tax planning us 1040a Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Tax planning us 1040a If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Tax planning us 1040a Check the status of your amended return using Where's My Amended Return? Go to IRS. Tax planning us 1040a gov and enter Where's My Amended Return? in the search box. Tax planning us 1040a You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Tax planning us 1040a It can take up to 3 weeks from the date you mailed it to show up in our system. Tax planning us 1040a Make a payment using one of several safe and convenient electronic payment options available on IRS. Tax planning us 1040a gov. Tax planning us 1040a Select the Payment tab on the front page of IRS. Tax planning us 1040a gov for more information. Tax planning us 1040a Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Tax planning us 1040a Figure your income tax withholding with the IRS Withholding Calculator on IRS. Tax planning us 1040a gov. Tax planning us 1040a Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Tax planning us 1040a Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Tax planning us 1040a gov. Tax planning us 1040a Request an Electronic Filing PIN by going to IRS. Tax planning us 1040a gov and entering Electronic Filing PIN in the search box. Tax planning us 1040a Download forms, instructions and publications, including accessible versions for people with disabilities. Tax planning us 1040a Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Tax planning us 1040a gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Tax planning us 1040a An employee can answer questions about your tax account or help you set up a payment plan. Tax planning us 1040a Before you visit, check the Office Locator on IRS. Tax planning us 1040a gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Tax planning us 1040a If you have a special need, such as a disability, you can request an appointment. Tax planning us 1040a Call the local number listed in the Office Locator, or look in the phone book under Unit