Can I Claim Child Care Credit if My Wife Works Part-Time?

Two paychecks can do great things for a couple’s finances. When you have kids, bringing in that second income may mean forking over a lot of money for child care. Uncle Sam might be willing to help out with the Child and Dependent Care Tax Credit. You may be able to claim the child-care credit even if your wife works only part time.

Income Requirement

To claim the child-care credit, you must have earned income from jobs or self-employment. There is no minimum income requirement, so it’s fine if your wife works only part time. You can also qualify if the child-care expenses were incurred because one of you was a full-time student or because you were looking for work. The care must be for a qualifying person; a qualifying child must be under 13 years old when the child-care expenses are incurred and must live with you for at least half the year. In addition, if your spouse or another dependent requires care due to a disability, that person may be a qualifying person as well.

Work-Related Expenses

The Internal Revenue Service won’t let you claim just any child-care expenses; they must be work related. For instance, you can’t claim what you pay a babysitter when the two of you spend an evening out. On the other hand, a work-related expense doesn’t necessarily mean you paid for child care because you and your wife were at work at the same time. Suppose you work different shifts and pay for child care so the spouse who works at night can get some sleep. That’s a work-related expense according to the IRS.

Limits

You can claim expenses up to $3,000 for one child or $6,000 when you have two or more children. However, the amount claimed may not be greater than the lesser of a couple’s two incomes. For instance, if you earned $25,000 and your wife made only $5,000 and you have two children, you can claim only $5,000. The tax credit is for 35 percent of the claimed expenses if your adjusted gross income is less than $15,000. From $15,000 to $43,000, the percentage is gradually reduced until it is only 20 percent of your child-care expenses when your AGI is over $43,000.

Claiming the Credit

If you want to claim the child-care tax credit, the IRS has yet another form for you to fill out at tax time. For this credit, complete Form 2441 and use Form 1040 or 11040A to file your taxes. You can’t use Form 1040EZ. You must identify each child, which means Social Security numbers are required. You cannot claim a tax credit amount that is greater than your tax liability for the year.