Top Frequently Asked Questions for Childcare Credit, Other Credits

My spouse and I both work and are eligible for the child and dependent care credit. Can I include my 5 year-old son's private kindergarten tuition as a qualified expense on Form 2441, Child and Dependent Care Expenses?

Answer:

No, tuition for kindergarten isn't a qualifying expense for the child and dependent care credit because expenses to attend kindergarten or a higher grade aren't expenses for the child's care.

However, the expense for a before- or after-school care program of a child in kindergarten or a higher grade may qualify, even though the expense of school tuition doesn't qualify.

My babysitter refused to provide me with her social security number. Can I still claim the amount I paid her for childcare while I worked? If so, how do I claim these childcare expenses on my tax return?

Answer:

Yes, you can still claim the child and dependent care credit when you're missing the provider's social security number or other taxpayer identification number by demonstrating due diligence in attempting to secure this information.

Claim the childcare expenses on Form 2441, Child and Dependent Care Expenses, and provide the care provider's information you have available (such as name and address). Write "See Attached Statement" in the columns missing information. Explain on the attached statement that you requested the provider's identifying number, but the provider didn't give it to you. This statement supports use of due diligence in trying to secure the identifying information for the claim.

May I claim both the child tax credit and the child and dependent care credit?

Answer:

Yes, you may claim both the child tax credit and the child and dependent care credit on your return if you qualify for both credits.

  • If you qualify for one or both credits, you may claim the credit(s) only on Form 1040, Form 1040A, U.S. Individual Income Tax Return, or Form 1040NR, U.S. Nonresident Alien Income Tax Return.
  • To claim the dependent care credit, you must also complete and attach Form 2441, Child and Dependent Care Expenses. The Instructions for Form 2441 explain the qualifications for the dependent care credit and how to calculate it.
  • The Instructions for Form 1040 and the Instructions for Form 1040A explain the qualifications for the child tax credit, taxpayer identification number requirements, and how to calculate the credit.
  • Complete Part I of Schedule 8812 (Form 1040A or 1040), Child Tax Credit, when claiming the child tax credit for a dependent child who has an ITIN.
  • Complete Parts II - IV of Schedule 8812 (Form 1040A or 1040) when claiming the additional child tax credit.
  • Attach the appropriate form or schedule to your Form 1040, 1040A, or 1040NR.

Note: If you don’t have a taxpayer identification number by the due date of your return (including extensions), you can't claim the child tax credit (CTC)/additional child tax credit (ACTC) on either your original or an amended return, even if you later get a taxpayer identification number. Also, the CTC/ACTC isn't allowed on either your original or an amended return regarding a child who didn't have a taxpayer identification number by the due date of your return (including extensions), even if that child later gets one.

Subcategory:

Can I claim the credit for the elderly or the permanently and totally disabled?

Answer:

If you're a U.S. citizen or resident, you may qualify for this credit if before the end of 2016 —

  • you were age 65 or older; or
  • you retired on permanent and total disability and received taxable disability income.

Married individuals must file a joint return to claim the credit unless they qualify as married living apart.

Even if you meet the above tests, you can't claim the credit if either of the following exceeds certain amounts:

  • your adjusted gross income; or
  • the total of your nontaxable social security benefits, nontaxable pensions, nontaxable annuities and nontaxable disability income.

For more information, see Publication 524, Credit for the Elderly or the Disabled.

What expenses qualify for an education credit?

Answer:

Expenses that qualify for an education credit (whether the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit) are qualified tuition and related expenses paid by the taxpayer during the taxable year. Qualified tuition and related expenses are tuition and fees required for the enrollment or attendance of the taxpayer, the taxpayer's spouse, or any dependent of the taxpayer at an eligible educational institution for courses of instruction.  

For the AOTC provisions, student activity fees are included in qualified education expenses only if the fees must be paid to the institution as a condition of enrollment or attendance. Expenses for books, supplies, and equipment needed for a course of study are included in qualified education expenses whether or not the materials are purchased from the educational institution.

For the Lifetime Learning Credit, student activity fees and expenses for course-related books, supplies and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution for enrollment or attendance by an eligible student.

Qualified tuition and related expenses don't include the following types of expenses:

  • Expenses related to any course of instruction or education involving sports, games or hobbies, or any noncredit course (unless the course or other education is part of the student's degree program or, in the case of the Lifetime Learning Credit, the student takes the course to acquire or improve job skills),
  • Student activity fees (unless required for enrollment or attendance),
  • Athletic fees (unless required for enrollment or attendance),
  • Costs of room and board,
  • Insurance premiums or medical expenses (including student health fees),
  • Transportation expenses, and
  • Other personal, living, or family expenses.

An eligible educational institution means a college, university, vocational school, or other postsecondary educational institution that's accredited and eligible to participate in the federal financial student aid programs administered by the Department of Education.

Note: You can't claim the AOTC on either an original or an amended return if either you or the student didn’t have a taxpayer identification number by the due date of your return (including extensions), even if you or the student later gets one of those numbers.

Subcategory:

Do tuition and related expenses paid to attend a private high school qualify for an education credit?

Answer:

No, expenses paid to attend a private high school don't qualify for an education credit because a high school isn't an eligible educational institution.

In general, an eligible educational institution is an accredited college, university, vocational school, or other postsecondary educational institution. To be eligible, the educational institution must also be eligible to participate in a federal financial student aid program administered by the Department of Education.

Subcategory:

If I pay college tuition and fees with a tax-free scholarship, can I claim an education credit on Form 8863 for those payments?

Answer:

No, you can't claim a credit for higher education expenses paid for by a tax-free scholarship.

Subcategory:

What is the lifetime learning credit?

Answer:

The lifetime learning credit is a nonrefundable tax credit with a per-family dollar limit that's available for qualified tuition and related expenses of higher education, whether the student is at the undergraduate or graduate level.

You calculate the lifetime learning credit by taking 20% of the first $10,000 of the qualified educational expenses paid for all eligible students. For a taxpayer with high modified adjusted gross income, a phaseout may apply.

Subcategory:

I heard there's a credit for hiring certain groups of workers, such as veterans or ex-felons. Is that the same thing as the work opportunity tax credit?

Answer:

Yes. The work opportunity tax credit (WOTC) provides an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs.

The Protecting Americans from Tax Hikes Act of 2015 extended the WOTC for members of targeted groups hired after December 31, 2014, and before January 1, 2020. The benefit is a 40 percent credit generally on the first $6,000 of wages paid to new hires in the first year of employment.

You must obtain certification from your state employment security agency that an individual is a targeted group member before you claim the credit. Generally, you obtain certification by submitting Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, to the state employment security agency. You must submit the form not later than the 28th day after the individual begins work for you. 

Newly hired individuals from the following targeted groups might qualify you for this tax credit:

  • a long-term family assistance recipient,
  • a qualified recipient of Temporary Assistance for Needy Families (TANF),
  • a qualified veteran,
  • a qualified ex-felon,
  • a designated community resident,
  • a vocational rehabilitation referral,
  • a summer youth employee,
  • a Supplemental Nutrition Assistance Program (SNAP) benefits (food stamps) recipient,
  • an SSI recipient, or
  • a qualified long-term unemployment recipient (for individuals who begin work after 2015)

Calculate the credit by completing Form 5884, Work Opportunity Credit, with the business' tax return or on Form 3800, General Business Credit, as appropriate. See the Instructions for Form 5884 for more information.

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Frequently Asked Question Subcategories for Childcare Credit, Other Credits