Only those dependent care expenses which allow you (and your spouse if you are married) to be gainfully employed are eligible.  This excludes care which is primarily for medical or educational purposes.

Eligible Dependents

Dependent children under age 13, or any other dependent who is incapable of caring for himself or herself and whose principal residence is in your home

Eligible Providers

1)    A licensed day care center which cares for more than six persons.
2)    An unlicensed provider caring for less than six persons.
3)    An in-home provider, as long as that person is not your child under age 19 or someone you or your spouse claim as a dependent for tax purposes.

Eligible Expenses

The maximum allowed may not exceed the following:
1)    $2,500 in the case of a married individual filing a separate return.
2)    $5,000 in all other cases.

Reimbursement is limited to the income of the lower earning spouse.  Income limitations shall not apply if the spouse is a full time student or is incapable of caring for himself or herself.

For more information, IRS publication 503, "Child and Dependent Care Credit", is available for viewing and download from the IRS website.

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Last modified: February 05, 2004