Part 3 - Child and Dependent Care Credit

In this tax school part, you will learn when and when you cannot take the child and dependent care expenses credit. We will explain how to figure the credit. You may be able to claim the credit if you pay someone to care for your dependent who is under age 13 or for your spouse or dependent who is not able to care for himself or herself. To qualify,  you must pay these expenses so you can work or look for work.

Tax School Home Page

Student Instructions:

Print this page, work on the questions and then submit test by mailing the answer sheet or by completing quiz online.

Instructions to submit quiz online successfully: Step-by-Step check list

Answer Sheet            Quiz Online

Most forms are in Adobe Acrobat PDF format. You will need Adobe Reader to view and print these forms. If you do not already have Adobe Reader installed on your computer, you may download the software for free.

Please study  IRS Publication 503 to complete the following test.

1. If you pay someone to come to your home and care for your dependent or spouse,         

A. You may be a household employer
B. You may have to pay employment taxes
C. You can claim the credit for child and dependent care expenses 
D. All of the above
 

A. Form 2441 or Schedule 2.
B. Form 2106 or Schedule 3.
C. Form 4567 or Schedule 1.
D. None of the above.                            
 

3. To qualify for child and dependent care expenses credit, you      

A. Can pay for care so that you will be able to go on vacation
B. Can hire your child who is under 19 years old
C. Can hire your aunt whom you can claim as a dependent
D. Must have a child that must live with you for more than half of the year and meet other requirements.
 

4. To claim the Child and Dependent Care Credit, you (and your spouse if you're married) must have earned income. Your spouse is treated as having earned income for any month that he or she is                         

A. A full-time student.
B. Physically not able to care for himself or herself. 
C. Mentally not able to care for himself or herself.
D. Any of the above.
 

5. Generally, married couples must file a joint return to take the child and dependent care credit. You may be able to file a separate tax return and still take the credit if

A. You are legally separated. 
B. You are living apart from your spouse.
C. Your spouse signs an agreement not to claim the credit.
D. Both A and B above.
 

6. Your child and dependent care expenses must be for the care of one or more qualifying persons such as  

A. A child who is under 18 years-old when the care was provided.
B. Your dependent daughter who was under the age of 13 when the care was provided.
C. Your parents who are perfectly able to care for themselves.
D. A person who did not live with you.
 

7. You take your 4-year-old child to nursery school that provides lunch and a few educational activities as part of its pre-school child-care service. Which one of the following would be correct?                               

A. You can count the total cost as child care because the costs were partly to provide education.
B. You can count the total cost when you figure the child and dependent care credit because lunch and educational activities are incident to the childcare and the cost cannot be separated.
C. Expenses were for child's lunch so they do count.
D. All of the above
 

8. You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. You become ill and miss 4 months of work but received sick pay. You continue to pay the nanny to care for the children while you are ill.

A. Your absence is not a short temporary absence, and your expenses are not qualifying care expenses because they are not work related.
B. Your absence is a short temporary absence, and your expenses are qualifying care expenses.
C. An absence of 6 months or less is a short, temporary absence
D. An absence of more than 2 weeks may never be considered a short, temporary absence regardless of the circumstances.

9. You place your 12 year old child in a boarding school so you can work full-time. Which of the following would be correct?                          

A. you can only count the educational part of the boarding costs as qualifying expenses
B. you can't count the boarding cost because it was not for a pre-school child
C. you can count that part of the expense in figuring your child and dependent care credit, if it can be separated from the cost of the education
D. If you place your child in boarding school, he will be away from the home and thus you can't claim the care credit
 

10. The work related expenses for the 'child and dependent care expenses care credit' are expenses that

A. Are for the cost of a babysitter while you and your spouse go out to eat.
B. Are not really for the qualifying person's care
C. Allow you to work or look for work
D. Allow you to go on vacation from work
 

11. If your spouse is a student or is not able to care for him or herself, he or she is treated as having earned income for any month that he or she is      

A. Not your dependent even if her or she lived in your home.
B. A partially disabled spouse capable of caring for him or herself.
C. Physically or mentally not able to care for him or herself or is a full time student
D. A student that is attending full time only at night
 

12. You can count child care expense payments you make to relatives who are   

A. Not your dependents, even if they live in your home.
B. Your children who are under 19 years old, as long as they not your dependents.
C. Your dependents for whom you (or your spouse) can claim an exemption. 
D. Any of the above.
 

13. You, a single taxpayer, paid work related child care expenses of $3,000 in tax year 2008. You were reimbursed $2,400 by a state social services agency. Which of the following is correct regarding the child and dependent care expenses credit? (two qualifying dependents).        

A. Since you were reimbursed, you can't take the child and dependent care expenses credit
B. You can use $1,000 to figure your credit
C. You can use $600 to figure your credit
D. You can use $2,600 to figure your credit
 

14. If the care provider information you give is incorrect or incomplete, your credit will not be allowed unless you                                            

A. Provide the correct information.
B. Show proof that you did pay.
C. Show due diligence in trying to supply the correct information by keeping the care provider's completed Form W-10.
D. Call the IRS and give them the telephone number of the care provider.
 

15. There are many ways the taxpayer can show due diligence. Which of the following is correct as far as showing due diligence?         

A. Get and keep the care provider's completed Form W-10.
B. Show a copy of the statement furnished by your employer if the the provider is your employer's dependent care plan.
C. Show a letter or invoice from the provider if it shows the necessary information.
D. Any of the above
 

16. There is a dollar limit on the amount of your work related expenses that you can use to figure the child and dependent care expenses credit. This limit is set per qualifying person. The limit is      

A. $3,000 for one qualifying person.
B. $6,000 for two or more qualifying people.
C. $3,000 for each qualifying person.
D. Both A and B are correct.

17. You and your spouse (MFJ) paid $5,000 in child care, you earned $19,000 for the entire year. Your spouse did not work and was not a student or disabled. You have only one qualifying child. What is your child and dependent care expenses credit for tax year 2008?

A. $0 federal credit.
B. $990 federal credit.
C. $960 federal credit.
D. $1,600 federal credit.

18. If I am single and want to file my return and have no tax liability.  If I claim the child and dependent care expenses credit for federal, would I get a refund?        

A. Yes, tax liability can be zero, and you can still qualify because for federal the credit is refundable.
B. No, you cannot get a refund for any part of the credit that is more than your regular tax because this tax credit is not refundable.
C. No, if you have tax, the child and dependent care credit would not cancel it and thus there is no reason to claim it.
D. No, the federal tax system does not have a Child and Dependent Care Expenses Credit.
 

19. Juan and Maria Escobedo are married and keep up a home for their two pre-school children. In tax year 2008, they claimed their children as dependents. Juan earned $15,200 and Maria earned $5,100. They paid $4,900 in work related child care expenses. What is their credit?

A. $-0- for federal.
B. $501.76 for federal.
C. $1,632 for federal.
D. $1,568 for federal.
 

20. The amount of child and dependent care credit you can claim is limited to your regular tax.

True False
 

21. In tax year 2008, if you are single with one qualifying child and your gross income is $40,100, what would your federal be if you paid $4,000 in child care?

A. $660.
B. $1,280.
C. $3,000.
D. $-0-.
 

22. If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), then you are not able claim a child and dependent expenses credit for that person.

True False

23. In tax year 2008, to qualify for the federal child and dependent care credit, your adjusted gross income must be less than                              

A. $70,000
B. $43,000
C. $100,000
D. There is no income limit.

24. You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. The fee you paid for the nanny search is NOT a work-related expense for the child and dependent care expenses credit.

True False

25. For purposes of claiming the Child and Dependent Care Expenses Credit, if your child turns age 13 during the year                            

A. The child is not a qualifying person because he has to have been under age 13 at the end of the year.
B. The child's age does not matter as long as he is your dependent.
C. The child is a qualifying person only for the qualifying expenses paid when he or she was under age 13 for federal.
D. The child is not a qualifying child because the child has to be in pre-school.
 

26. In tax year 2008, Ramon's wife did not work all year because she was not able to care for herself. They are filing jointly. Ramon worked and earned $21,100. They have one qualifying child for the Child and Dependent care credit. They paid $2,000 for care of the child. How much credit can they qualify for?   

A. Federal $0.
B. Federal $744.
C. Federal $640.
D. Federal $620.
 

27. Kevin's girlfriend claimed his son on her tax return. His son lived with her all year. Kevin paid for his child care expenses a total of $2,200. Can Kevin claim the Child and Dependent care Expenses Credit?      

A. No, because he is not his dependent. Besides he did not live in his home at all and therefore not the custodial parent.
B. Yes, because he passes the relationship test
C. Yes, because he paid for the child care expenses
D. Yes, because they (Kevin and his girlfriend) signed Form 8332
 

28. If you are the non-custodial parent, for purposes of claiming the child and and dependent care credit, the child can be your qualifying child.             

True False
 

29. If you and your qualifying person did not live in the same home for more than half of the year, other than for reasons because of birth, death or temporary absences, you are able to claim the child and dependent care expenses credit.                               

True False
 

30. For purposes of the child and dependent care expenses credit, if your spouse was permanently and totally disabled and you have two qualifying children he or she is considered to have earned $500 per month for the time that he or she was disabled.                  

True False