If you paid someone to care for your child or other qualifying person so you (and your spouse if filing a joint return) could work or look for work in 2006, you may be able to take the credit for child and dependent care expenses. You (and your spouse if filing a joint return) must have earned income to take the credit. There are special provisions if your spouse was a student or disabled. If you can take the credit, use Form 2441 to figure the amount of your credit. Generally, you no longer need to pay over half the cost of keeping up a home for a qualifying person in order to claim child and dependent care credit. However, the qualifying person must have lived with you for more than half of 2006.
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A qualifying child under age 13 whom you can claim as a dependent. If the child turned 13 during the year, the child is a qualifying person for the part of the year he or she was under age 13.
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Your disabled spouse who is not able to care for himself or herself.
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Any disabled person not able to care for himself or herself whom you can claim as a dependent (or could claim as a dependent except that the person had gross income of $3,200 or more or filed a joint return.)
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Any disabled person not able to care for himself or herself whom you could claim as a dependent except that you (or your spouse if filing a joint return), could be claimed as a dependent on someone else's 2006 return
Qualified expenses include amounts paid for household services and care of the qualifying person while you worked or looked for work. Child support payments are not qualified expenses. Also, expenses reimbursed by a state social service agency are not qualified expenses unless you included the reimbursement in your income.
Care includes the cost of services for the qualifying person's well-being and protection. It does not include the cost of clothing or entertainment.
You can include the cost of care provided outside your home for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours a day in your home. If the care was provided by a dependent care center, the center must meet all applicable state and local regulations. 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.
You can include amounts paid for items other than the care of your child (such as food and schooling) only if the items are incidental to the care of the child and cannot be separated from the total cost. But do not include the cost of schooling for a child in kindergarten or above. You can include the cost of a day camp, even if it specializes in a particular activity, such as soccer. But do not include any expenses for sending your child to an overnight camp.
You can take the credit or the exclusion if all five of the following apply.
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Your filing status is single, head of household, qualifying widow(er), or married filing jointly.
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The care was provided so you (and your spouse if filing a joint return) could work or look for work. However, if you did not find a job and have no earned income for the year, you cannot take the credit or the exclusion. But if your spouse was a student or disabled, special provisions apply.
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The care must be for one or more qualifying persons.
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The person who provided the care was not your spouse, the parent of your qualifying child under age 13, or a person whom you can claim as a dependent. If your child provided the care, he or she must have been age 19 or older by the end of 2006.
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You report the required information about the care provider and, if taking the credit, information about the qualifying person.
If you (or your spouse if filing a joint return) received any dependent care benefits for 2006, you must use Form 2441 to figure the amount, if any, of the benefits you may exclude from your income on Form 1040, line 7. Part III of Form 2441 will be figured before the credit is figured.