Child and Dependent Care Credit

Tax Year: 2018
Prerequisite: None

Course Description:
Taxpayers with children or other dependents often find it difficult to satisfactorily manage their responsibilities unless they have sufficient income. Several tax credits are available to help in this regard, each with their own sets of rules for eligibility.
This course focuses on the Child and Dependent Care Credit, which is intended to help taxpayers by refunding a portion of their dependent care expenses incurred while either working or looking for work.
The course presents a comprehensive review of the rules that define the individuals for whom dependent care expenses may be claimed and the types of expenses that are eligible. Employer-sponsored dependent care benefits plans are discussed together with the method for claiming the credit.

The relevant governing regulations are referenced along with a discussion of several tax court cases in which the Dependent and Child Care Credit played a role and from which tax preparers can learn some lessons on exercising due diligence.
Learning Objectives:
After completing this course, students will be able to:
  • given the relevant background information about an individual, correctly apply the qualifying person tests to determine whether that individual can be regarded as a dependent for a taxpayer who wishes to claim the child and dependent care credit
  • correctly apply the general rules relating to the definition of earned income for purposes of the child and dependent care credit
  • correctly identify the conditions under which a claim for the child and dependent care credit may be acceptable for taxpayers who are not legally married or who are considered unmarried for tax purposes
  • correctly identify and calculate the impact on the child and dependent care credit of dependent care benefits and other payment assistance that a taxpayer may receive to offset the cost of obtaining care for their dependents
  • given examples of taxpayers’ work-related expenses, earned income, dollar limits, and adjusted gross income, identify the eligible expenses and correctly calculate the amount of credit that may be claimed
  • identify the correct form that must be used to claim the child and dependent care credit, the information relating to the caregiver that must be provided, and the due diligence obligations of the tax preparer when completing the form

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