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1040a 2012 Tax Return

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1040a 2012 Tax Return

1040a 2012 tax return 37. 1040a 2012 tax return   Other Credits Table of Contents What's New Introduction Useful Items - You may want to see: Nonrefundable CreditsAdoption Credit Alternative Motor Vehicle Credit Alternative Fuel Vehicle Refueling Property Credit Credit to Holders of Tax Credit Bonds Foreign Tax Credit Mortgage Interest Credit Nonrefundable Credit for Prior Year Minimum Tax Plug-in Electric Drive Motor Vehicle Credit Residential Energy Credits Retirement Savings Contributions Credit (Saver's Credit) Refundable CreditsCredit for Tax on Undistributed Capital Gain Health Coverage Tax Credit Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld What's New Adoption credit. 1040a 2012 tax return  The maximum adoption credit is $12,970 for 2013. 1040a 2012 tax return See Adoption Credit . 1040a 2012 tax return Plug-in electric vehicle credit. 1040a 2012 tax return  This credit has expired. 1040a 2012 tax return Credit for prior year minimum tax. 1040a 2012 tax return  The refundable portion of the credit for prior year minimum tax has expired. 1040a 2012 tax return Excess withholding of social security and railroad retirement tax. 1040a 2012 tax return  Social security tax and tier 1 railroad retirement (RRTA) tax were both withheld during 2013 at a rate of 6. 1040a 2012 tax return 2% of wages up to $113,700. 1040a 2012 tax return If you worked for more than one employer and had too much social security or RRTA tax withheld during 2013, you may be entitled to a credit for the excess withholding. 1040a 2012 tax return See Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld . 1040a 2012 tax return Introduction This chapter discusses the following nonrefundable credits. 1040a 2012 tax return Adoption credit. 1040a 2012 tax return Alternative motor vehicle credit. 1040a 2012 tax return Alternative fuel vehicle refueling property credit. 1040a 2012 tax return Credit to holders of tax credit bonds. 1040a 2012 tax return Foreign tax credit. 1040a 2012 tax return Mortgage interest credit. 1040a 2012 tax return Nonrefundable credit for prior year minimum tax. 1040a 2012 tax return Plug-in electric drive motor vehicle credit. 1040a 2012 tax return Residential energy credits. 1040a 2012 tax return Retirement savings contributions credit. 1040a 2012 tax return This chapter also discusses the following refundable credits. 1040a 2012 tax return Credit for tax on undistributed capital gain. 1040a 2012 tax return Health coverage tax credit. 1040a 2012 tax return Credit for excess social security tax or railroad retirement tax withheld. 1040a 2012 tax return Several other credits are discussed in other chapters in this publication. 1040a 2012 tax return Child and dependent care credit (chapter 32). 1040a 2012 tax return Credit for the elderly or the disabled (chapter 33). 1040a 2012 tax return Child tax credit (chapter 34). 1040a 2012 tax return Education credits (chapter 35). 1040a 2012 tax return Earned income credit (chapter 36). 1040a 2012 tax return Nonrefundable credits. 1040a 2012 tax return   The first part of this chapter, Nonrefundable Credits , covers ten credits that you subtract from your tax. 1040a 2012 tax return These credits may reduce your tax to zero. 1040a 2012 tax return If these credits are more than your tax, the excess is not refunded to you. 1040a 2012 tax return Refundable credits. 1040a 2012 tax return   The second part of this chapter, Refundable Credits , covers three credits that are treated as payments and are refundable to you. 1040a 2012 tax return These credits are added to the federal income tax withheld and any estimated tax payments you made. 1040a 2012 tax return If this total is more than your total tax, the excess will be refunded to you. 1040a 2012 tax return Useful Items - You may want to see: Publication 502 Medical and Dental Expenses 514 Foreign Tax Credit for  Individuals 530 Tax Information for Homeowners 590 Individual Retirement Arrangements (IRAs) Form (and Instructions) 1116 Foreign Tax Credit 2439 Notice to Shareholder of Undistributed Long-Term Capital Gains 5695 Residential Energy Credits 8396 Mortgage Interest Credit 8801 Credit For Prior Year Minimum Tax — Individuals, Estates, and Trusts 8828 Recapture of Federal Mortgage Subsidy 8839 Qualified Adoption Expenses 8880 Credit for Qualified Retirement Savings Contributions 8885 Health Coverage Tax Credit 8910 Alternative Motor Vehicle Credit 8911 Alternative Fuel Vehicle Refueling Property Credit 8912 Credit to Holders of Tax Credit Bonds 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit Nonrefundable Credits The credits discussed in this part of the chapter can reduce your tax. 1040a 2012 tax return However, if the total of these credits is more than your tax, the excess is not refunded to you. 1040a 2012 tax return Adoption Credit You may be able to take a tax credit of up to $12,970 for qualified expenses paid to adopt an eligible child. 1040a 2012 tax return The credit may be allowed for the adoption of a child with special needs even if you do not have any qualified expenses. 1040a 2012 tax return If your modified adjusted gross income (AGI) is more than $194,580, your credit is reduced. 1040a 2012 tax return If your modified AGI is $234,580 or more, you cannot take the credit. 1040a 2012 tax return Qualified adoption expenses. 1040a 2012 tax return   Qualified adoption expenses are reasonable and necessary expenses directly related to, and whose principal purpose is for, the legal adoption of an eligible child. 1040a 2012 tax return These expenses include: Adoption fees, Court costs, Attorney fees, Travel expenses (including amounts spent for meals and lodging) while away from home, and Re-adoption expenses to adopt a foreign child. 1040a 2012 tax return Nonqualified expenses. 1040a 2012 tax return   Qualified adoption expenses do not include expenses: That violate state or federal law, For carrying out any surrogate parenting arrangement, For the adoption of your spouse's child, For which you received funds under any federal, state, or local program, Allowed as a credit or deduction under any other federal income tax rule, or Paid or reimbursed by your employer or any other person or organization. 1040a 2012 tax return Eligible child. 1040a 2012 tax return   The term “eligible child” means any individual: Under 18 years old, or Physically or mentally incapable of caring for himself or herself. 1040a 2012 tax return Child with special needs. 1040a 2012 tax return   An eligible child is a child with special needs if all three of the following apply. 1040a 2012 tax return The child was a citizen or resident of the United States (including U. 1040a 2012 tax return S. 1040a 2012 tax return possessions) at the time the adoption process began. 1040a 2012 tax return A state (including the District of Columbia) has determined that the child cannot or should not be returned to his or her parents' home. 1040a 2012 tax return The state has determined that the child will not be adopted unless assistance is provided to the adoptive parents. 1040a 2012 tax return Factors used by states to make this determination include: The child's ethnic background, The child's age, Whether the child is a member of a minority or sibling group, and Whether the child has a medical condition or a physical, mental, or emotional handicap. 1040a 2012 tax return When to take the credit. 1040a 2012 tax return   Generally, until the adoption becomes final, you take the credit in the year after your qualified expenses were paid or incurred. 1040a 2012 tax return If the adoption becomes final, you take the credit in the year your expenses were paid or incurred. 1040a 2012 tax return See the Instructions for Form 8839 for more specific information on when to take the credit. 1040a 2012 tax return Foreign child. 1040a 2012 tax return   If the child is not a U. 1040a 2012 tax return S. 1040a 2012 tax return citizen or resident at the time the adoption process began, you cannot take the credit unless the adoption becomes final. 1040a 2012 tax return You treat all adoption expenses paid or incurred in years before the adoption becomes final as paid or incurred in the year it becomes final. 1040a 2012 tax return How to take the credit. 1040a 2012 tax return   Figure your 2013 nonrefundable credit and any carryforward to 2014 on Form 8839 and attach it to your Form 1040. 1040a 2012 tax return Include the credit in your total for Form 1040, line 53. 1040a 2012 tax return Check box c and enter “8839” on the line next to that box. 1040a 2012 tax return More information. 1040a 2012 tax return   For more information, see the Instructions for Form 8839. 1040a 2012 tax return Alternative Motor Vehicle Credit You may be able to take this credit if you place a qualified fuel cell vehicle in service in 2013. 1040a 2012 tax return Amount of credit. 1040a 2012 tax return   Generally, you can rely on the manufacturer's certification to the IRS that a specific make, model, and model year vehicle qualifies for the credit and the amount of the credit for which it qualifies. 1040a 2012 tax return In the case of a foreign manufacturer, you generally can rely on its domestic distributor's certification to the IRS. 1040a 2012 tax return   Ordinarily the amount of the credit is 100% of the manufacturer's (or domestic distributor's) certification to the IRS of the maximum credit allowable. 1040a 2012 tax return How to take the credit. 1040a 2012 tax return   To take the credit, you must complete Form 8910 and attach it to your Form 1040. 1040a 2012 tax return Include the credit in your total for Form 1040, line 53. 1040a 2012 tax return Check box c and enter “8910” on the line next to that box. 1040a 2012 tax return More information. 1040a 2012 tax return   For more information on the credit, see the Instructions for Form 8910. 1040a 2012 tax return Alternative Fuel Vehicle Refueling Property Credit You may be able to take a credit if you place qualified alternative fuel vehicle refueling property in service in 2013. 1040a 2012 tax return Qualified alternative fuel vehicle refueling property. 1040a 2012 tax return   Qualified alternative fuel vehicle refueling property is any property (other than a building or its structural components) used for either of the following. 1040a 2012 tax return To store or dispense alternative fuel into the fuel tank of a motor vehicle propelled by the fuel, but only if the storage or dispensing is at the point where the fuel is delivered into that tank. 1040a 2012 tax return To recharge an electric vehicle, but only if the recharging property is located at the point where the vehicle is recharged. 1040a 2012 tax return   The following are alternative fuels. 1040a 2012 tax return Any fuel at least 85% of the volume of which consists of one or more of the following: ethanol, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas, or hydrogen. 1040a 2012 tax return Any mixture which consists of two or more of the following: biodiesel, diesel fuel, or kerosene, and at least 20% of the volume of which consists of biodiesel determined without regard to any kerosene. 1040a 2012 tax return Electricity. 1040a 2012 tax return Amount of the credit. 1040a 2012 tax return   For personal use property, the credit is generally the smaller of 30% of the property's cost or $1,000. 1040a 2012 tax return For business use property, the credit is generally the smaller of 30% of the property's cost or $30,000. 1040a 2012 tax return How to take the credit. 1040a 2012 tax return   To take the credit, you must complete Form 8911 and attach it to your Form 1040. 1040a 2012 tax return Include the credit in your total for Form 1040, line 53. 1040a 2012 tax return Check box c and enter “8911” on the line next to that box. 1040a 2012 tax return More information. 1040a 2012 tax return   For more information on the credit, see the Form 8911 instructions. 1040a 2012 tax return Credit to Holders of Tax Credit Bonds Tax credit bonds are bonds in which the holder receives a tax credit in lieu of some or all of the interest on the bond. 1040a 2012 tax return You may be able to take a credit if you are a holder of one of the following bonds. 1040a 2012 tax return Clean renewable energy bonds (issued before 2010). 1040a 2012 tax return New clean renewable energy bonds. 1040a 2012 tax return Qualified energy conservation bonds. 1040a 2012 tax return Qualified school construction bonds. 1040a 2012 tax return Qualified zone academy bonds. 1040a 2012 tax return Build America bonds. 1040a 2012 tax return In some instances, an issuer may elect to receive a credit for interest paid on the bond. 1040a 2012 tax return If the issuer makes this election, you cannot also claim a credit. 1040a 2012 tax return Interest income. 1040a 2012 tax return   The amount of any tax credit allowed (figured before applying tax liability limits) must be included as interest income on your tax return. 1040a 2012 tax return How to take the credit. 1040a 2012 tax return   Complete Form 8912 and attach it to your Form 1040. 1040a 2012 tax return Include the credit in your total for Form 1040, line 53. 1040a 2012 tax return Check box c and enter “8912” on the line next to that box. 1040a 2012 tax return More information. 1040a 2012 tax return   For more information, see the Instructions for Form 8912. 1040a 2012 tax return Foreign Tax Credit You generally can choose to take income taxes you paid or accrued during the year to a foreign country or U. 1040a 2012 tax return S. 1040a 2012 tax return possession as a credit against your U. 1040a 2012 tax return S. 1040a 2012 tax return income tax. 1040a 2012 tax return Or, you can deduct them as an itemized deduction (see chapter 22). 1040a 2012 tax return You cannot take a credit (or deduction) for foreign income taxes paid on income that you exclude from U. 1040a 2012 tax return S. 1040a 2012 tax return tax under any of the following. 1040a 2012 tax return Foreign earned income exclusion. 1040a 2012 tax return Foreign housing exclusion. 1040a 2012 tax return Income from Puerto Rico exempt from U. 1040a 2012 tax return S. 1040a 2012 tax return tax. 1040a 2012 tax return Possession exclusion. 1040a 2012 tax return Limit on the credit. 1040a 2012 tax return   Unless you can elect not to file Form 1116 (see Exception , later), your foreign tax credit cannot be more than your U. 1040a 2012 tax return S. 1040a 2012 tax return tax liability (Form 1040, line 44), multiplied by a fraction. 1040a 2012 tax return The numerator of the fraction is your taxable income from sources outside the United States. 1040a 2012 tax return The denominator is your total taxable income from U. 1040a 2012 tax return S. 1040a 2012 tax return and foreign sources. 1040a 2012 tax return See Publication 514 for more information. 1040a 2012 tax return How to take the credit. 1040a 2012 tax return   Complete Form 1116 and attach it to your Form 1040. 1040a 2012 tax return Enter the credit on Form 1040, line 47. 1040a 2012 tax return Exception. 1040a 2012 tax return   You do not have to complete Form 1116 to take the credit if all of the following apply. 1040a 2012 tax return All of your gross foreign source income was from interest and dividends and all of that income and the foreign tax paid on it were reported to you on Form 1099-INT, Form 1099-DIV, or Schedule K-1 (or substitute statement). 1040a 2012 tax return If you had dividend income from shares of stock, you held those shares for at least 16 days. 1040a 2012 tax return You are not filing Form 4563 or excluding income from sources within Puerto Rico. 1040a 2012 tax return The total of your foreign taxes was not more than $300 (not more than $600 if married filing jointly). 1040a 2012 tax return All of your foreign taxes were: Legally owed and not eligible for a refund, and Paid to countries that are recognized by the United States and do not support terrorism. 1040a 2012 tax return More information. 1040a 2012 tax return   For more information on the credit and these requirements, see the Instructions for Form 1116. 1040a 2012 tax return Mortgage Interest Credit The mortgage interest credit is intended to help lower-income individuals own a home. 1040a 2012 tax return If you qualify, you can take the credit each year for part of the home mortgage interest you pay. 1040a 2012 tax return Who qualifies. 1040a 2012 tax return   You may be eligible for the credit if you were issued a qualified mortgage credit certificate (MCC) from your state or local government. 1040a 2012 tax return Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home. 1040a 2012 tax return Amount of credit. 1040a 2012 tax return   Figure your credit on Form 8396. 1040a 2012 tax return If your mortgage loan amount is equal to (or smaller than) the certified indebtedness (loan) amount shown on your MCC, enter on Form 8396, line 1, all the interest you paid on your mortgage during the year. 1040a 2012 tax return   If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the credit on only part of the interest you paid. 1040a 2012 tax return To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage by the following fraction. 1040a 2012 tax return      Certified indebtedness amount on your MCC     Original amount of your mortgage   Limit based on credit rate. 1040a 2012 tax return   If the certificate credit rate is more than 20%, the credit you are allowed cannot be more than $2,000. 1040a 2012 tax return If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates, this $2,000 limit must be divided based on the interest held by each person. 1040a 2012 tax return See Publication 530 for more information. 1040a 2012 tax return Carryforward. 1040a 2012 tax return   Your credit (after applying the limit based on the credit rate) is also subject to a limit based on your tax that is figured using Form 8396. 1040a 2012 tax return If your allowable credit is reduced because of this tax liability limit, you can carry forward the unused portion of the credit to the next 3 years or until used, whichever comes first. 1040a 2012 tax return   If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward any amount more than $2,000 (or your share of the $2,000 if you must divide the credit). 1040a 2012 tax return How to take the credit. 1040a 2012 tax return    Figure your 2013 credit and any carryforward to 2014 on Form 8396, and attach it to your Form 1040. 1040a 2012 tax return Be sure to include any credit carryforward from 2010, 2011, and 2012. 1040a 2012 tax return   Include the credit in your total for Form 1040, line 53. 1040a 2012 tax return Check box c and enter “8396” on the line next to that box. 1040a 2012 tax return Reduced home mortgage interest deduction. 1040a 2012 tax return   If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by the amount of the mortgage interest credit shown on Form 8396, line 3. 1040a 2012 tax return You must do this even if part of that amount is to be carried forward to 2014. 1040a 2012 tax return For more information about the home mortgage interest deduction, see chapter 23. 1040a 2012 tax return Recapture of federal mortgage subsidy. 1040a 2012 tax return   If you received an MCC with your mortgage loan, you may have to recapture (pay back) all or part of the benefit you received from that program. 1040a 2012 tax return The recapture may be required if you sell or dispose of your home at a gain during the first 9 years after the date you closed your mortgage loan. 1040a 2012 tax return See the Instructions for Form 8828 and chapter 15 for more information. 1040a 2012 tax return More information. 1040a 2012 tax return   For more information on the credit, see the Form 8396 instructions. 1040a 2012 tax return Nonrefundable Credit for Prior Year Minimum Tax The tax laws give special treatment to some kinds of income and allow special deductions and credits for some kinds of expenses. 1040a 2012 tax return If you benefit from these laws, you may have to pay at least a minimum amount of tax in addition to any other tax on these items. 1040a 2012 tax return This is called the alternative minimum tax. 1040a 2012 tax return The special treatment of some items of income and expenses only allows you to postpone paying tax until a later year. 1040a 2012 tax return If in prior years you paid alternative minimum tax because of these tax postponement items, you may be able to take a credit for prior year minimum tax against your current year's regular tax. 1040a 2012 tax return You may be able to take a credit against your regular tax if for 2012 you had: An alternative minimum tax liability and adjustments or preferences other than exclusion items, A minimum tax credit that you are carrying forward to 2013, or An unallowed qualified electric vehicle credit. 1040a 2012 tax return How to take the credit. 1040a 2012 tax return    Figure your 2013 nonrefundable credit (if any), and any carryforward to 2014 on Form 8801, and attach it to your Form 1040. 1040a 2012 tax return Include the credit in your total for Form 1040, line 53, and check box b. 1040a 2012 tax return You can carry forward any unused credit for prior year minimum tax to later years until it is completely used. 1040a 2012 tax return More information. 1040a 2012 tax return   For more information on the credit, see the Instructions for Form 8801. 1040a 2012 tax return Plug-in Electric Drive Motor Vehicle Credit You may be able to take this credit if you placed in service for business or personal use a qualified plug-in electric drive motor vehicle or a qualified two- or three-wheeled plug-in electric vehicle in 2013 and you meet some other requirements. 1040a 2012 tax return Qualified plug-in electric drive motor vehicle. 1040a 2012 tax return   This is a new vehicle with at least four wheels that: Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 4 kilowatt hours and is capable of being recharged from an external source of electricity, and Has a gross vehicle weight of less than 14,000 pounds. 1040a 2012 tax return Qualified two- or three-wheeled plug-in electric vehicle. 1040a 2012 tax return   This is a new vehicle with two or three wheels that: Is capable of achieving a speed of 45 miles per hour or greater, Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 2. 1040a 2012 tax return 5 kilowatt hours and is capable of being recharged from an external source of electricity, and Has a gross vehicle weight of less than 14,000 pounds. 1040a 2012 tax return Certification and other requirements. 1040a 2012 tax return   Generally, you can rely on the manufacturer's (or, in the case of a foreign manufacturer, its domestic distributor's) certification to the IRS that a specific make, model, and model year vehicle qualifies for the credit and, if applicable, the amount of the credit for which it qualifies. 1040a 2012 tax return However, if the IRS publishes an announcement that the certification for any specific make, model, and model year vehicle has been withdrawn, you cannot rely on the certification for such a vehicle purchased after the date of publication of the withdrawal announcement. 1040a 2012 tax return   The following requirements must also be met to qualify for the credit. 1040a 2012 tax return You are the owner of the vehicle. 1040a 2012 tax return If the vehicle is leased, only the lessor, and not the lessee, is entitled to the credit. 1040a 2012 tax return You placed the vehicle in service during 2013. 1040a 2012 tax return The vehicle is manufactured primarily for use on public streets, roads, and highways. 1040a 2012 tax return The original use of the vehicle began with you. 1040a 2012 tax return You acquired the vehicle for your use or to lease to others, and not for resale. 1040a 2012 tax return In the case of the qualified two- or three-wheeled plug-in electric vehicle, the vehicle is acquired after 2011 and before 2014. 1040a 2012 tax return You use the vehicle primarily in the United States. 1040a 2012 tax return How to take the credit. 1040a 2012 tax return   To take the credit, you must complete Form 8936 and attach it to your Form 1040. 1040a 2012 tax return Include the credit in your total for Form 1040, line 53. 1040a 2012 tax return Check box c and enter “8936” on the line next to that box. 1040a 2012 tax return More information. 1040a 2012 tax return   For more information on the credit, see the Form 8936 instructions. 1040a 2012 tax return Residential Energy Credits You may be able to take one or both of the following credits if you made energy saving improvements to your home located in the United States in 2013. 1040a 2012 tax return Nonbusiness energy property credit. 1040a 2012 tax return Residential energy efficient property credit. 1040a 2012 tax return If you are a member of a condominium management association for a condominium you own or a tenant-stockholder in a cooperative housing corporation, you are treated as having paid your proportionate share of any costs of the association or corporation for purposes of these credits. 1040a 2012 tax return Nonbusiness energy property credit. 1040a 2012 tax return   You may be able to take a credit equal to the sum of: 10% of the amount paid or incurred for qualified energy efficiency improvements installed during 2013, and Any residential energy property costs paid or incurred in 2013. 1040a 2012 tax return   There is a lifetime limit of $500 for all years after 2005, of which only $200 can be for windows; $50 for any advanced main air circulating fan; $150 for any qualified natural gas, propane, or oil furnace or hot water boiler; and $300 for any item of energy efficient building property. 1040a 2012 tax return    If the total of nonbusiness energy property credits you have taken in previous years (after 2005) is more than $500, you cannot take this credit in 2013. 1040a 2012 tax return   Qualified energy efficiency improvements are the following improvements that are new, can be expected to remain in use at least 5 years, and meet certain requirements for energy efficiency. 1040a 2012 tax return Any insulation material or system that is specifically and primarily designed to reduce heat loss or gain of a home. 1040a 2012 tax return Exterior window (including skylights). 1040a 2012 tax return Exterior doors. 1040a 2012 tax return Any metal or asphalt roof that has appropriate pigmented coatings or cooling granules specifically and primarily designed to reduce heat gain of the home. 1040a 2012 tax return   Residential energy property is any of the following. 1040a 2012 tax return Certain electric heat pump water heaters; electric heat pumps; central air conditioners; natural gas, propane, or oil water heater; and stoves that use biomass fuel. 1040a 2012 tax return Qualified natural gas, propane, or oil furnaces; and qualified natural gas, propane, or oil hot water boilers. 1040a 2012 tax return Certain advanced main air circulating fans used in natural gas, propane, or oil furnaces. 1040a 2012 tax return Residential energy efficient property credit. 1040a 2012 tax return   You may be able to take a credit of 30% of your costs of qualified solar electric property, solar water heating property, fuel cell property, small wind energy property, and geothermal heat pump property. 1040a 2012 tax return The credit amount for costs paid for qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity of the property. 1040a 2012 tax return Basis reduction. 1040a 2012 tax return   You must reduce the basis of your home by the amount of any credit allowed. 1040a 2012 tax return How to take the credit. 1040a 2012 tax return   Complete Form 5695 and attach it to your Form 1040. 1040a 2012 tax return Enter the credit on Form 1040, line 52. 1040a 2012 tax return More information. 1040a 2012 tax return   For more information on these credits, see the Form 5695 instructions. 1040a 2012 tax return Retirement Savings Contributions Credit (Saver's Credit) You may be able to take this credit if you, or your spouse if filing jointly, made: Contributions (other than rollover contributions) to a traditional or Roth IRA, Elective deferrals to a 401(k) or 403(b) plan (including designated Roth contributions) or to a governmental 457, SEP, or SIMPLE plan, Voluntary employee contributions to a qualified retirement plan (including the federal Thrift Savings Plan), or Contributions to a 501(c)(18)(D) plan. 1040a 2012 tax return However, you cannot take the credit if either of the following applies. 1040a 2012 tax return The amount on Form 1040, line 38, or Form 1040A, line 22, is more than $29,500 ($44,250 if head of household; $59,000 if married filing jointly). 1040a 2012 tax return The person(s) who made the qualified contribution or elective deferral (a) was born after January 1, 1996, (b) is claimed as a dependent on someone else's 2013 tax return, or (c) was a student (defined next). 1040a 2012 tax return Student. 1040a 2012 tax return   You were a student if during any part of 5 calendar months of 2013 you: Were enrolled as a full-time student at a school, or Took a full-time, on-farm training course given by a school or a state, county, or local government agency. 1040a 2012 tax return School. 1040a 2012 tax return   A school includes a technical, trade, or mechanical school. 1040a 2012 tax return It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. 1040a 2012 tax return How to take the credit. 1040a 2012 tax return   Figure the credit on Form 8880. 1040a 2012 tax return Enter the credit on your Form 1040, line 50, or your Form 1040A, line 32, and attach Form 8880 to your return. 1040a 2012 tax return More information. 1040a 2012 tax return   For more information on the credit, see the Form 8880 instructions. 1040a 2012 tax return Refundable Credits The credits discussed in this part of the chapter are treated as payments of tax. 1040a 2012 tax return If the total of these credits, withheld federal income tax, and estimated tax payments is more than your total tax, the excess can be refunded to you. 1040a 2012 tax return Credit for Tax on Undistributed Capital Gain You must include in your income any amounts that regulated investment companies (commonly called mutual funds) or real estate investment trusts (REITs) allocated to you as capital gain distributions, even if you did not actually receive them. 1040a 2012 tax return If the mutual fund or REIT paid a tax on the capital gain, you are allowed a credit for the tax since it is considered paid by you. 1040a 2012 tax return The mutual fund or REIT will send you Form 2439 showing your share of the undistributed capital gains and the tax paid, if any. 1040a 2012 tax return How to take the credit. 1040a 2012 tax return   To take the credit, attach Copy B of Form 2439 to your Form 1040. 1040a 2012 tax return Include the amount from box 2 of your Form 2439 in the total for Form 1040, line 71, and check box a. 1040a 2012 tax return More information. 1040a 2012 tax return   See Capital Gain Distributions in chapter 8 for more information on undistributed capital gains. 1040a 2012 tax return Health Coverage Tax Credit You may be able to take this credit for any month in which all the following statements were true on the first day of the month. 1040a 2012 tax return You were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment TAA (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient (defined later); or you were a qualified family member of one of these individuals when the individual died or you finalized a divorce with one of these individuals. 1040a 2012 tax return You and/or your family members were covered by a qualified health insurance plan for which you paid the entire premiums, or your portion of the premiums, directly to your health plan or to “U. 1040a 2012 tax return S. 1040a 2012 tax return Treasury–HCTC. 1040a 2012 tax return ” You were not enrolled in Medicare Part A, B, or C, or you were enrolled in Medicare but your family member(s) qualified for the HCTC. 1040a 2012 tax return You were not enrolled in Medicaid or the Children's Health Insurance Program (CHIP). 1040a 2012 tax return You were not enrolled in the Federal Employees Health Benefits program (FEHBP) or eligible to receive benefits under the U. 1040a 2012 tax return S. 1040a 2012 tax return military health system (TRICARE). 1040a 2012 tax return You were not imprisoned under federal, state, or local authority. 1040a 2012 tax return Your employer did not pay 50% or more of the cost of coverage. 1040a 2012 tax return You did not receive a 65% COBRA premium reduction from your former employer or COBRA administrator. 1040a 2012 tax return But, you cannot take the credit if you can be claimed as a dependent on someone else's 2013 tax return. 1040a 2012 tax return If you meet all of these conditions, you may be able to take a credit of up to 72. 1040a 2012 tax return 5% of the amount you paid directly to a qualified health plan for you and any qualifying family members. 1040a 2012 tax return You cannot take the credit for insurance premiums on coverage that was actually paid for with a National Emergency Grant. 1040a 2012 tax return The amount you paid for qualified health insurance coverage must be reduced by any Archer MSA and health savings account distributions used to pay for the coverage. 1040a 2012 tax return You can take this credit on your tax return or have it paid on your behalf in advance to your insurance company. 1040a 2012 tax return If the credit is paid on your behalf in advance, that amount will reduce the amount of the credit you can take on your tax return. 1040a 2012 tax return TAA recipient. 1040a 2012 tax return   You were an eligible TAA recipient on the first day of the month if, for any day in that month or the prior month, you: Received a trade readjustment allowance, or Would have been entitled to receive such an allowance except that you had not exhausted all rights to any unemployment insurance (except additional compensation that is funded by a state and is not reimbursed from any federal funds) to which you were entitled (or would be entitled if you applied). 1040a 2012 tax return Example. 1040a 2012 tax return You received a trade adjustment allowance for January 2013. 1040a 2012 tax return You were an eligible TAA recipient on the first day of January and February. 1040a 2012 tax return Alternative TAA recipient. 1040a 2012 tax return   You were an eligible alternative TAA recipient on the first day of the month if, for that month or the prior month, you received benefits under an alternative trade adjustment assistance program for older workers established by the Department of Labor. 1040a 2012 tax return Example. 1040a 2012 tax return You received benefits under an alternative trade adjustment assistance program for older workers for October 2013. 1040a 2012 tax return The program was established by the Department of Labor. 1040a 2012 tax return You were an eligible alternative TAA recipient on the first day of October and November. 1040a 2012 tax return RTAA recipient. 1040a 2012 tax return   You were an eligible RTAA recipient on the first day of the month if, for that month or the prior month, you received benefits under a reemployment trade adjustment assistance program for older workers established by the Department of Labor. 1040a 2012 tax return PBGC pension recipient. 1040a 2012 tax return   You were an eligible PBGC pension recipient on the first day of the month, if both of the following apply. 1040a 2012 tax return You were age 55 or older on the first day of the month. 1040a 2012 tax return You received a benefit for that month paid by the PBGC under title IV of the Employee Retirement Income Security Act of 1974 (ERISA). 1040a 2012 tax return If you received a lump-sum payment from the PBGC after August 5, 2002, you meet item (2) above for any month that you would have received a PBGC benefit if you had not received the lump-sum payment. 1040a 2012 tax return How to take the credit. 1040a 2012 tax return   To take the credit, complete Form 8885 and attach it to your Form 1040. 1040a 2012 tax return Include your credit in the total for Form 1040, line 71, and check box c. 1040a 2012 tax return   You must attach health insurance bills (or COBRA payment coupons) and proof of payment for any amounts you include on Form 8885, line 2. 1040a 2012 tax return For details, see Publication 502 or Form 8885. 1040a 2012 tax return More information. 1040a 2012 tax return   For definitions and special rules, including those relating to qualified health insurance plans, qualifying family members, the effect of certain life events, and employer-sponsored health insurance plans, see Publication 502 and the Form 8885 instructions. 1040a 2012 tax return Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld Most employers must withhold social security tax from your wages. 1040a 2012 tax return If you work for a railroad employer, that employer must withhold tier 1 railroad retirement (RRTA) tax and tier 2 RRTA tax. 1040a 2012 tax return If you worked for two or more employers in 2013, you may have had too much social security tax withheld from your pay. 1040a 2012 tax return If one or more of those employers was a railroad employer, too much tier 1 RRTA tax may also have been withheld at the 6. 1040a 2012 tax return 2% rate. 1040a 2012 tax return You can claim the excess social security or tier 1 RRTA tax as a credit against your income tax when you file your return. 1040a 2012 tax return For the tier 1 RRTA tax, only use the portion of the tier 1 RRTA tax that was taxed at the 6. 1040a 2012 tax return 2% rate when figuring if excess tier 1 RRTA tax was withheld; do not include any portion of the tier 1 RRTA tax that was withheld at the Medicare tax rate (1. 1040a 2012 tax return 45%) or the Additional Medicare Tax rate (. 1040a 2012 tax return 9%). 1040a 2012 tax return The following table shows the maximum amount of wages subject to tax and the maximum amount of tax that should have been withheld for 2013. 1040a 2012 tax return Type of tax Maximum  wages subject to tax Maximum tax that should have been withheld Social security or RRTA tier 1 $113,700 $7,049. 1040a 2012 tax return 40 RRTA tier 2 $84,300 $3,709. 1040a 2012 tax return 20 All wages are subject to Medicare tax withholding. 1040a 2012 tax return   Use Form 843, Claim for Refund and Request for Abatement, to claim a refund of excess tier 2 RRTA tax. 1040a 2012 tax return Be sure to attach a copy of all of your W-2 forms. 1040a 2012 tax return Use Worksheet 3-3 in Publication 505, Tax Withholding and Estimated Tax, to help you figure the excess amount. 1040a 2012 tax return Employer's error. 1040a 2012 tax return   If any one employer withheld too much social security or tier 1 RRTA tax, you cannot take the excess as a credit against your income tax. 1040a 2012 tax return The employer should adjust the tax for you. 1040a 2012 tax return If the employer does not adjust the overcollection, you can file a claim for refund using Form 843. 1040a 2012 tax return Joint return. 1040a 2012 tax return   If you are filing a joint return, you cannot add the social security or tier 1 RRTA tax withheld from your spouse's wages to the amount withheld from your wages. 1040a 2012 tax return Figure the withholding separately for you and your spouse to determine if either of you has excess withholding. 1040a 2012 tax return How to figure the credit if you did not work for a railroad. 1040a 2012 tax return   If you did not work for a railroad during 2013, figure the credit as follows: 1. 1040a 2012 tax return Add all social security tax withheld (but not more than $7,049. 1040a 2012 tax return 40 for each employer). 1040a 2012 tax return Enter the total here   2. 1040a 2012 tax return Enter any uncollected social security tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT”   3. 1040a 2012 tax return Add lines 1 and 2. 1040a 2012 tax return If $7,049. 1040a 2012 tax return 40 or less, stop here. 1040a 2012 tax return You cannot take  the credit   4. 1040a 2012 tax return Social security tax limit 7,049. 1040a 2012 tax return 40 5. 1040a 2012 tax return Credit. 1040a 2012 tax return Subtract line 4 from line 3. 1040a 2012 tax return Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $ Example. 1040a 2012 tax return You are married and file a joint return with your spouse who had no gross income in 2013. 1040a 2012 tax return During 2013, you worked for the Brown Technology Company and earned $60,000 in wages. 1040a 2012 tax return Social security tax of $3,720 was withheld. 1040a 2012 tax return You also worked for another employer in 2013 and earned $55,000 in wages. 1040a 2012 tax return $3,410 of social security tax was withheld from these wages. 1040a 2012 tax return Because you worked for more than one employer and your total wages were more than $113,700, you can take a credit of $80. 1040a 2012 tax return 60 for the excess social security tax withheld. 1040a 2012 tax return 1. 1040a 2012 tax return Add all social security tax withheld (but not more than $7,049. 1040a 2012 tax return 40 for each employer). 1040a 2012 tax return Enter the total here $7,130. 1040a 2012 tax return 00 2. 1040a 2012 tax return Enter any uncollected social security tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT” -0- 3. 1040a 2012 tax return Add lines 1 and 2. 1040a 2012 tax return If $7,049. 1040a 2012 tax return 40 or less, stop here. 1040a 2012 tax return You cannot take the credit 7,130. 1040a 2012 tax return 00 4. 1040a 2012 tax return Social security tax limit 7,049. 1040a 2012 tax return 40 5. 1040a 2012 tax return Credit. 1040a 2012 tax return Subtract line 4 from line 3. 1040a 2012 tax return Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $80. 1040a 2012 tax return 60 How to figure the credit if you worked for a railroad. 1040a 2012 tax return   If you were a railroad employee at any time during 2013, figure the credit as follows: 1. 1040a 2012 tax return Add all social security and tier 1 RRTA tax withheld at the 6. 1040a 2012 tax return 2% rate (but not more than $7,049. 1040a 2012 tax return 40 for each employer). 1040a 2012 tax return Enter the total here   2. 1040a 2012 tax return Enter any uncollected social security and tier 1 RRTA tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT”   3. 1040a 2012 tax return Add lines 1 and 2. 1040a 2012 tax return If $7,049. 1040a 2012 tax return 40 or less, stop here. 1040a 2012 tax return You cannot take  the credit   4. 1040a 2012 tax return Social security and tier 1 RRTA  tax limit 7,049. 1040a 2012 tax return 40 5. 1040a 2012 tax return Credit. 1040a 2012 tax return Subtract line 4 from line 3. 1040a 2012 tax return Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $ How to take the credit. 1040a 2012 tax return   Enter the credit on Form 1040, line 69, or include it in the total for Form 1040A, line 41. 1040a 2012 tax return More information. 1040a 2012 tax return   For more information on the credit, see Publication 505. 1040a 2012 tax return Prev  Up  Next   Home   More Online Publications
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The 1040a 2012 Tax Return

1040a 2012 tax return 32. 1040a 2012 tax return   Child and Dependent Care Credit Table of Contents Reminders Introduction Useful Items - You may want to see: Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. 1040a 2012 tax return Employment Taxes for Household Employers Reminders Taxpayer identification number needed for each qualifying person. 1040a 2012 tax return  You must include on line 2 of Form 2441 the name and taxpayer identification number (generally the social security number) of each qualifying person. 1040a 2012 tax return See Taxpayer identification number under Qualifying Person Test, later. 1040a 2012 tax return You may have to pay employment taxes. 1040a 2012 tax return  If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer who has to pay employment taxes. 1040a 2012 tax return Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. 1040a 2012 tax return See Employment Taxes for Household Employers , later. 1040a 2012 tax return Introduction This chapter discusses the credit for child and dependent care expenses and covers the following topics. 1040a 2012 tax return Tests you must meet to claim the credit. 1040a 2012 tax return How to figure the credit. 1040a 2012 tax return How to claim the credit. 1040a 2012 tax return Employment taxes you may have to pay as a household employer. 1040a 2012 tax return 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. 1040a 2012 tax return The credit can be up to 35% of your expenses. 1040a 2012 tax return To qualify, you must pay these expenses so you can work or look for work. 1040a 2012 tax return This credit should not be confused with the child tax credit discussed in chapter 34. 1040a 2012 tax return Dependent care benefits. 1040a 2012 tax return   If you received any dependent care benefits from your employer during the year, you may be able to exclude from your income all or part of them. 1040a 2012 tax return You must complete Form 2441, Part III, before you can figure the amount of your credit. 1040a 2012 tax return See Dependent Care Benefits under How To Figure the Credit, later. 1040a 2012 tax return Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 503 Child and Dependent Care Expenses 926 Household Employer's Tax Guide Form (and Instructions) 2441 Child and Dependent Care Expenses Schedule H (Form 1040) Household Employment Taxes W-7 Application for IRS Individual Taxpayer Identification Number W-10 Dependent Care Provider's Identification and Certification Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040 or Form 1040A, not Form 1040EZ, and meet all the following tests. 1040a 2012 tax return The care must be for one or more qualifying persons who are identified on Form 2441. 1040a 2012 tax return (See Qualifying Person Test . 1040a 2012 tax return ) You (and your spouse if filing jointly) must have earned income during the year. 1040a 2012 tax return (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. 1040a 2012 tax return ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. 1040a 2012 tax return (See Work-Related Expense Test , later. 1040a 2012 tax return ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. 1040a 2012 tax return If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. 1040a 2012 tax return You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. 1040a 2012 tax return (See Payments to Relatives or Dependents under Work-Related Expense Test, later. 1040a 2012 tax return ) Your filing status may be single, head of household, or qualifying widow(er) with dependent child. 1040a 2012 tax return If you are married, you must file a joint return, unless an exception applies to you. 1040a 2012 tax return (See Joint Return Test , later. 1040a 2012 tax return ) You must identify the care provider on your tax return. 1040a 2012 tax return (See Provider Identification Test , later. 1040a 2012 tax return ) If you exclude or deduct dependent care benefits provided by a dependent care benefits plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). 1040a 2012 tax return (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. 1040a 2012 tax return See Reduced Dollar Limit under How To Figure the Credit, later. 1040a 2012 tax return ) These tests are presented in Figure 32-A and are also explained in detail in this chapter. 1040a 2012 tax return Figure 32-A. 1040a 2012 tax return Can You Claim the Credit? Please click here for the text description of the image. 1040a 2012 tax return Figure 32-A Can You Claim the Credit? Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. 1040a 2012 tax return A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart, later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. 1040a 2012 tax return Dependent defined. 1040a 2012 tax return   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. 1040a 2012 tax return To be your dependent, a person must be your qualifying child (or your qualifying relative). 1040a 2012 tax return Qualifying child. 1040a 2012 tax return   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. 1040a 2012 tax return More information. 1040a 2012 tax return   For more information about who is a dependent or a qualifying child, see chapter 3. 1040a 2012 tax return Physically or mentally not able to care for oneself. 1040a 2012 tax return   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. 1040a 2012 tax return Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. 1040a 2012 tax return Person qualifying for part of year. 1040a 2012 tax return   You determine a person's qualifying status each day. 1040a 2012 tax return For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. 1040a 2012 tax return Also see Yearly limit under Dollar Limit, later. 1040a 2012 tax return Birth or death of otherwise qualifying person. 1040a 2012 tax return   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home for more than half the time he or she was alive in 2013. 1040a 2012 tax return Taxpayer identification number. 1040a 2012 tax return   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). 1040a 2012 tax return If the correct information is not shown, the credit may be reduced or disallowed. 1040a 2012 tax return Individual taxpayer identification number (ITIN) for aliens. 1040a 2012 tax return   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. 1040a 2012 tax return The ITIN is entered wherever an SSN is requested on a tax return. 1040a 2012 tax return To apply for an ITIN, see Form W-7. 1040a 2012 tax return   An ITIN is for tax use only. 1040a 2012 tax return It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. 1040a 2012 tax return S. 1040a 2012 tax return law. 1040a 2012 tax return Adoption taxpayer identification number (ATIN). 1040a 2012 tax return   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. 1040a 2012 tax return File Form W-7A, Application for Taxpayer Identification Number for Pending U. 1040a 2012 tax return S. 1040a 2012 tax return Adoptions. 1040a 2012 tax return Child of divorced or separated parents or parents living apart. 1040a 2012 tax return   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. 1040a 2012 tax return   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. 1040a 2012 tax return If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. 1040a 2012 tax return For details and an exception for a parent who works at night, see Pub. 1040a 2012 tax return 501. 1040a 2012 tax return   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. 1040a 2012 tax return Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. 1040a 2012 tax return Earned income. 1040a 2012 tax return   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. 1040a 2012 tax return A net loss from self-employment reduces earned income. 1040a 2012 tax return Earned income also includes strike benefits and any disability pay you report as wages. 1040a 2012 tax return   Generally, only taxable compensation is included. 1040a 2012 tax return However, you can elect to include nontaxable combat pay in earned income. 1040a 2012 tax return If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. 1040a 2012 tax return (In other words, if one of you makes the election, the other one can also make it but does not have to. 1040a 2012 tax return ) You should figure your credit both ways and make the election if it gives you a greater tax benefit. 1040a 2012 tax return Members of certain religious faiths opposed to social security. 1040a 2012 tax return   Certain income earned by persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes may not be considered earned income for this purpose. 1040a 2012 tax return See Earned Income Test in Publication 503. 1040a 2012 tax return Not earned income. 1040a 2012 tax return   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarship or fellowship grants, except for those reported on a Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received by you, Income of nonresident aliens that is not effectively connected with a U. 1040a 2012 tax return S. 1040a 2012 tax return trade or business, or Any amount received for work while an inmate in a penal institution. 1040a 2012 tax return Rule for student-spouse or spouse not able to care for self. 1040a 2012 tax return   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. 1040a 2012 tax return (Your spouse also must live with you for more than half the year. 1040a 2012 tax return )   If you are filing a joint return, this rule also applies to you. 1040a 2012 tax return You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. 1040a 2012 tax return   Figure the earned income of the nonworking spouse described under (1) or (2) above as explained under Earned Income Limit , later. 1040a 2012 tax return   This rule applies to only one spouse for any one month. 1040a 2012 tax return If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. 1040a 2012 tax return Full-time student. 1040a 2012 tax return   You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. 1040a 2012 tax return You must have been a full-time student for some part of each of 5 calendar months during the year. 1040a 2012 tax return (The months need not be consecutive. 1040a 2012 tax return ) School. 1040a 2012 tax return   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. 1040a 2012 tax return A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. 1040a 2012 tax return Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. 1040a 2012 tax return Expenses are considered work-related only if both of the following are true. 1040a 2012 tax return They allow you (and your spouse if filing jointly) to work or look for work. 1040a 2012 tax return They are for a qualifying person's care. 1040a 2012 tax return Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. 1040a 2012 tax return If you are married, generally both you and your spouse must work or look for work. 1040a 2012 tax return One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. 1040a 2012 tax return Your work can be for others or in your own business or partnership. 1040a 2012 tax return It can be either full time or part time. 1040a 2012 tax return Work also includes actively looking for work. 1040a 2012 tax return However, if you do not find a job and have no earned income for the year, you cannot take this credit. 1040a 2012 tax return See Earned Income Test , earlier. 1040a 2012 tax return An expense is not considered work-related merely because you had it while you were working. 1040a 2012 tax return The purpose of the expense must be to allow you to work. 1040a 2012 tax return Whether your expenses allow you to work or look for work depends on the facts. 1040a 2012 tax return Example 1. 1040a 2012 tax return The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. 1040a 2012 tax return Example 2. 1040a 2012 tax return You work during the day. 1040a 2012 tax return Your spouse works at night and sleeps during the day. 1040a 2012 tax return You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. 1040a 2012 tax return Your expenses are considered work-related. 1040a 2012 tax return Volunteer work. 1040a 2012 tax return    For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. 1040a 2012 tax return Work for part of year. 1040a 2012 tax return   If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. 1040a 2012 tax return For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work-related. 1040a 2012 tax return However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (2½ months × $250). 1040a 2012 tax return Temporary absence from work. 1040a 2012 tax return   You do not have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. 1040a 2012 tax return Instead, you can figure your credit including the expenses you paid for the period of absence. 1040a 2012 tax return   An absence of 2 weeks or less is a short, temporary absence. 1040a 2012 tax return An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. 1040a 2012 tax return Example. 1040a 2012 tax return You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. 1040a 2012 tax return You become ill and miss 4 months of work but receive sick pay. 1040a 2012 tax return You continue to pay the nanny to care for the children while you are ill. 1040a 2012 tax return Your absence is not a short, temporary absence, and your expenses are not considered work-related. 1040a 2012 tax return Part-time work. 1040a 2012 tax return   If you work part-time, you generally must figure your expenses for each day. 1040a 2012 tax return However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. 1040a 2012 tax return Any day when you work at least 1 hour is a day of work. 1040a 2012 tax return Example 1. 1040a 2012 tax return You work 3 days a week. 1040a 2012 tax return While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. 1040a 2012 tax return You can pay the center $150 for any 3 days a week or $250 for 5 days a week. 1040a 2012 tax return Your child attends the center 5 days a week. 1040a 2012 tax return Your work-related expenses are limited to $150 a week. 1040a 2012 tax return Example 2. 1040a 2012 tax return The facts are the same as in Example 1 except the center does not offer a 3-day option. 1040a 2012 tax return The entire $250 weekly fee may be a work-related expense. 1040a 2012 tax return Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. 1040a 2012 tax return You do not have to choose the least expensive way of providing care. 1040a 2012 tax return The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. 1040a 2012 tax return Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. 1040a 2012 tax return Expenses for household services qualify if part of the services is for the care of qualifying persons. 1040a 2012 tax return See Household services , later. 1040a 2012 tax return Expenses not for care. 1040a 2012 tax return   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. 1040a 2012 tax return However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. 1040a 2012 tax return   Child support payments are not for care and do not qualify for the credit. 1040a 2012 tax return Education. 1040a 2012 tax return   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. 1040a 2012 tax return Expenses to attend kindergarten or a higher grade are not expenses for care. 1040a 2012 tax return Do not use these expenses to figure your credit. 1040a 2012 tax return   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. 1040a 2012 tax return   Summer school and tutoring programs are not for care. 1040a 2012 tax return Example 1. 1040a 2012 tax return You take your 3-year-old child to a nursery school that provides lunch and educational activities as a part of its preschool childcare service. 1040a 2012 tax return The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. 1040a 2012 tax return You can count the total cost when you figure the credit. 1040a 2012 tax return Example 2. 1040a 2012 tax return You place your 10-year-old child in a boarding school so you can work full time. 1040a 2012 tax return Only the part of the boarding school expense that is for the care of your child is a work-related expense. 1040a 2012 tax return You can count that part of the expense in figuring your credit if it can be separated from the cost of education. 1040a 2012 tax return You cannot count any part of the amount you pay the school for your child's education. 1040a 2012 tax return Care outside your home. 1040a 2012 tax return   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. 1040a 2012 tax return Dependent care center. 1040a 2012 tax return   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. 1040a 2012 tax return   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. 1040a 2012 tax return Camp. 1040a 2012 tax return   The cost of sending your child to an overnight camp is not considered a work-related expense. 1040a 2012 tax return The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. 1040a 2012 tax return Transportation. 1040a 2012 tax return   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. 1040a 2012 tax return This includes transportation by bus, subway, taxi, or private car. 1040a 2012 tax return However, transportation not provided by a care provider is not for the care of a qualifying person. 1040a 2012 tax return Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. 1040a 2012 tax return Fees and deposits. 1040a 2012 tax return   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. 1040a 2012 tax return However, a forfeited deposit is not for the care of a qualifying person if care is not provided. 1040a 2012 tax return Example 1. 1040a 2012 tax return 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. 1040a 2012 tax return The fee you paid is a work-related expense. 1040a 2012 tax return Example 2. 1040a 2012 tax return You placed a deposit with a preschool to reserve a place for your 3-year-old child. 1040a 2012 tax return You later sent your child to a different preschool and forfeited the deposit. 1040a 2012 tax return The forfeited deposit is not for care and so is not a work-related expense. 1040a 2012 tax return Household services. 1040a 2012 tax return   Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. 1040a 2012 tax return   Household services are ordinary and usual services done in and around your home that are necessary to run your home. 1040a 2012 tax return They include the services of a housekeeper, maid, or cook. 1040a 2012 tax return However, they do not include the services of a chauffeur, bartender, or gardener. 1040a 2012 tax return See Household Services in Publication 503 for more information. 1040a 2012 tax return   In this chapter, the term housekeeper refers to any household employee whose services include the care of a qualifying person. 1040a 2012 tax return Taxes paid on wages. 1040a 2012 tax return   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. 1040a 2012 tax return See Employment Taxes for Household Employers , later. 1040a 2012 tax return Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. 1040a 2012 tax return However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. 1040a 2012 tax return Joint Return Test Generally, married couples must file a joint return to take the credit. 1040a 2012 tax return However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. 1040a 2012 tax return Legally separated. 1040a 2012 tax return   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. 1040a 2012 tax return You may be eligible to take the credit on your return using head of household filing status. 1040a 2012 tax return Married and living apart. 1040a 2012 tax return   You are not considered married and are eligible to take the credit if all the following apply. 1040a 2012 tax return You file a return apart from your spouse. 1040a 2012 tax return Your home is the home of a qualifying person for more than half the year. 1040a 2012 tax return You pay more than half the cost of keeping up your home for the year. 1040a 2012 tax return Your spouse does not live in your home for the last 6 months of the year. 1040a 2012 tax return Costs of keeping up a home. 1040a 2012 tax return   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. 1040a 2012 tax return   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. 1040a 2012 tax return   They also do not include the purchase, permanent improvement, or replacement of property. 1040a 2012 tax return For example, you cannot include the cost of replacing a water heater. 1040a 2012 tax return However, you can include the cost of repairing a water heater. 1040a 2012 tax return Death of spouse. 1040a 2012 tax return   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. 1040a 2012 tax return If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's return. 1040a 2012 tax return Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. 1040a 2012 tax return Use Form 2441, Part I, to show the information. 1040a 2012 tax return If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). 1040a 2012 tax return Information needed. 1040a 2012 tax return   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. 1040a 2012 tax return   If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. 1040a 2012 tax return If the care provider is an organization, then it is the employer identification number (EIN). 1040a 2012 tax return   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). 1040a 2012 tax return In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. 1040a 2012 tax return   If you cannot provide all of the information or if the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. 1040a 2012 tax return Getting the information. 1040a 2012 tax return   You can use Form W-10 to request the required information from the care provider. 1040a 2012 tax return If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10 including: A copy of the provider's social security card, A copy of the provider's completed Form W-4 if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the information. 1040a 2012 tax return    You should keep this information with your tax records. 1040a 2012 tax return Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. 1040a 2012 tax return Due diligence. 1040a 2012 tax return   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. 1040a 2012 tax return However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. 1040a 2012 tax return   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. 1040a 2012 tax return Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. 1040a 2012 tax return Provider refusal. 1040a 2012 tax return   If the provider refuses to give you their identifying information, you should report on Form 2441 whatever information you have (such as the name and address). 1040a 2012 tax return Enter “See Attached Statement” in the columns calling for the information you do not have. 1040a 2012 tax return Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. 1040a 2012 tax return Be sure to write your name and social security number on this statement. 1040a 2012 tax return The statement will show that you used due diligence in trying to furnish the necessary information. 1040a 2012 tax return U. 1040a 2012 tax return S. 1040a 2012 tax return citizens and resident aliens living abroad. 1040a 2012 tax return   If you are living abroad, your care provider may not have, and may not be required to get, a U. 1040a 2012 tax return S. 1040a 2012 tax return taxpayer identification number (for example, an SSN or EIN). 1040a 2012 tax return If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. 1040a 2012 tax return How To Figure the Credit Your credit is a percentage of your work-related expenses. 1040a 2012 tax return Your expenses are subject to the earned income limit and the dollar limit. 1040a 2012 tax return The percentage is based on your adjusted gross income. 1040a 2012 tax return Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. 1040a 2012 tax return Expenses prepaid in an earlier year. 1040a 2012 tax return   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. 1040a 2012 tax return Claim the expenses for the later year as if they were actually paid in that later year. 1040a 2012 tax return Expenses not paid until the following year. 1040a 2012 tax return   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. 1040a 2012 tax return You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. 1040a 2012 tax return See Payments for prior year's expenses under Amount of Credit in Publication 503. 1040a 2012 tax return    If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. 1040a 2012 tax return You may be able to claim a credit for them on your 2014 return. 1040a 2012 tax return Expenses reimbursed. 1040a 2012 tax return   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. 1040a 2012 tax return Example. 1040a 2012 tax return You paid work-related expenses of $3,000. 1040a 2012 tax return You are reimbursed $2,000 by a state social services agency. 1040a 2012 tax return You can use only $1,000 to figure your credit. 1040a 2012 tax return Medical expenses. 1040a 2012 tax return   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. 1040a 2012 tax return You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. 1040a 2012 tax return   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. 1040a 2012 tax return However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. 1040a 2012 tax return    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. 1040a 2012 tax return Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. 1040a 2012 tax return See Reduced Dollar Limit , later. 1040a 2012 tax return But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. 1040a 2012 tax return Dependent care benefits. 1040a 2012 tax return   Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. 1040a 2012 tax return Your salary may have been reduced to pay for these benefits. 1040a 2012 tax return If you received benefits as an employee, they should be shown in box 10 of your Form W-2. 1040a 2012 tax return See Statement for employee , later. 1040a 2012 tax return Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. 1040a 2012 tax return Enter the amount of these benefits on Form 2441, Part III, line 12. 1040a 2012 tax return Exclusion or deduction. 1040a 2012 tax return   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. 1040a 2012 tax return Your employer can tell you whether your benefit plan qualifies. 1040a 2012 tax return To claim the exclusion, you must complete Part III of Form 2441. 1040a 2012 tax return You cannot use Form 1040EZ. 1040a 2012 tax return   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. 1040a 2012 tax return Therefore, you would not get an exclusion from wages. 1040a 2012 tax return Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. 1040a 2012 tax return To claim the deduction, you must use Form 2441. 1040a 2012 tax return   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). 1040a 2012 tax return The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. 1040a 2012 tax return See Earned Income Limit, later. 1040a 2012 tax return    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. 1040a 2012 tax return Statement for employee. 1040a 2012 tax return   Your employer must give you a Form W-2 (or similar statement) showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. 1040a 2012 tax return Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. 1040a 2012 tax return Effect of exclusion on credit. 1040a 2012 tax return   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. 1040a 2012 tax return Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. 1040a 2012 tax return Earned income is defined under Earned Income Test , earlier. 1040a 2012 tax return For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. 1040a 2012 tax return Separated spouse. 1040a 2012 tax return   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test , earlier), you are not considered married for purposes of the earned income limit. 1040a 2012 tax return Use only your income in figuring the earned income limit. 1040a 2012 tax return Surviving spouse. 1040a 2012 tax return   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. 1040a 2012 tax return Community property laws. 1040a 2012 tax return   You should disregard community property laws when you figure earned income for this credit. 1040a 2012 tax return You or your spouse is a student or not able to care for self. 1040a 2012 tax return   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. 1040a 2012 tax return His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. 1040a 2012 tax return Spouse works. 1040a 2012 tax return   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. 1040a 2012 tax return Spouse qualifies for part of month. 1040a 2012 tax return    If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. 1040a 2012 tax return You are a student or not able to care for self. 1040a 2012 tax return   These rules also apply if you are a student or not able to care for yourself and you are filing a joint return. 1040a 2012 tax return For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). 1040a 2012 tax return If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. 1040a 2012 tax return Both spouses qualify. 1040a 2012 tax return   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. 1040a 2012 tax return Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. 1040a 2012 tax return This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. 1040a 2012 tax return If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. 1040a 2012 tax return This $6,000 limit does not need to be divided equally among them. 1040a 2012 tax return For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. 1040a 2012 tax return Yearly limit. 1040a 2012 tax return   The dollar limit is a yearly limit. 1040a 2012 tax return The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. 1040a 2012 tax return Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. 1040a 2012 tax return Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. 1040a 2012 tax return Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. 1040a 2012 tax return Your reduced dollar limit is figured on Form 2441, Part III. 1040a 2012 tax return See Dependent Care Benefits , earlier, for information on excluding or deducting these benefits. 1040a 2012 tax return Example 1. 1040a 2012 tax return George is a widower with one child and earns $24,000 a year. 1040a 2012 tax return He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. 1040a 2012 tax return His employer pays an additional $1,000 under a dependent care benefit plan. 1040a 2012 tax return This $1,000 is excluded from George's income. 1040a 2012 tax return Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. 1040a 2012 tax return This is because his dollar limit is reduced as shown next. 1040a 2012 tax return   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. 1040a 2012 tax return Randall is married and both he and his wife are employed. 1040a 2012 tax return Each has earned income in excess of $6,000. 1040a 2012 tax return They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. 1040a 2012 tax return Randall's work-related expenses are $6,000 for the year. 1040a 2012 tax return Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. 1040a 2012 tax return Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. 1040a 2012 tax return Although the dollar limit for his work- related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. 1040a 2012 tax return This is because his dollar limit is reduced as shown next. 1040a 2012 tax return   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits Randall selects from employer's cafeteria plan and excludes from income −5,000 3) Reduced dollar limit on expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. 1040a 2012 tax return This percentage depends on your adjusted gross income shown on Form 1040, line 38, or Form 1040A, line 22. 1040a 2012 tax return The following table shows the percentage to use based on adjusted gross income. 1040a 2012 tax return   IF your adjusted gross income is: THEN the percentage is:       Over   But not over         $0   $15,000   35%       15,000   17,000   34%       17,000   19,000   33%       19,000   21,000   32%       21,000   23,000   31%       23,000   25,000   30%       25,000   27,000   29%       27,000   29,000   28%       29,000   31,000   27%       31,000   33,000   26%       33,000   35,000   25%       35,000   37,000   24%       37,000   39,000   23%       39,000   41,000   22%       41,000   43,000   21%       43,000   No limit   20%   How To Claim the Credit To claim the credit, you can file Form 1040 or Form 1040A. 1040a 2012 tax return You cannot claim the credit on Form 1040EZ. 1040a 2012 tax return Form 1040 or 1040A. 1040a 2012 tax return   You must complete Form 2441 and attach it to your Form 1040 or 1040A. 1040a 2012 tax return Enter the credit on Form 1040, line 48, or Form 1040A, line 29. 1040a 2012 tax return Limit on credit. 1040a 2012 tax return   The amount of credit you can claim is generally limited to the amount of your tax. 1040a 2012 tax return For more information, see the Instructions for Form 2441. 1040a 2012 tax return Tax credit not refundable. 1040a 2012 tax return   You cannot get a refund for any part of the credit that is more than this limit. 1040a 2012 tax return Recordkeeping. 1040a 2012 tax return You should keep records of your work-related expenses. 1040a 2012 tax return Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and the length of the disability. 1040a 2012 tax return Other records you should keep to support your claim for the credit are described earlier under Provider Identification Test . 1040a 2012 tax return Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. 1040a 2012 tax return If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. 1040a 2012 tax return If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. 1040a 2012 tax return Self-employed persons who are in business for themselves are not household employees. 1040a 2012 tax return Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. 1040a 2012 tax return If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. 1040a 2012 tax return This control could include providing rules of conduct and appearance and requiring regular reports. 1040a 2012 tax return In this case, you do not have to pay employment taxes. 1040a 2012 tax return But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. 1040a 2012 tax return If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. 1040a 2012 tax return Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. 1040a 2012 tax return Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. 1040a 2012 tax return Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. 1040a 2012 tax return For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. 1040a 2012 tax return State employment tax. 1040a 2012 tax return   You may also have to pay state unemployment tax. 1040a 2012 tax return Contact your state unemployment tax office for information. 1040a 2012 tax return You should also find out whether you need to pay or collect other state employment taxes or carry workers' compensation insurance. 1040a 2012 tax return For a list of state unemployment tax agencies, visit the U. 1040a 2012 tax return S. 1040a 2012 tax return Department of Labor's website. 1040a 2012 tax return A link to that website is in Publication 926, or you can find it with an online search. 1040a 2012 tax return Prev  Up  Next   Home   More Online Publications