Figuring the Credit

To determine the amount of the credit, multiply the work-related expenses (after applying the earned income and dollar limits) by a percentage. The percentage depends on the taxpayer's adjusted gross income.

Use Form 2441, which is divided into three parts:

• Part I is for general information about the care provider
• Part II is where the credit for child and dependent care expenses is calculated
• Part III is where employer-provided dependent care benefits are reported

All taxpayers complete Part I. Taxpayers who did not receive dependent care benefits from their employers also complete Part II. Taxpayers who did receive these benefits complete Part III first, then Part II.

To review the software entries, go to the Volunteer Resource Guide (Tab 5), Form 2441 - Credit for Child and Dependent Care Expenses.