Case Study 4: Earned Income Test

The previous interview with Dorothy continues below with the questions from the Credit for Child & Dependent Care Expenses screening sheet in the Volunteer Resource Guide, Tab G, Nonrefundable Credits.

Do Dorothy and her husband pass the earned income test for the credit?

Play Audio

Volunteer says…

Dorothy responds…

I believe you mentioned earlier that you and your husband both work, is that correct?

Yes.

Did you both work while your daughter was in daycare?

Yes and no. My husband just changed careers. He went to school the first half of the year, but he began working full-time within a month of finishing his program in July.

So, he was a full-time student for the first six months of the tax year?

Yes. Does that disqualify us?

No. That does not disqualify you.

Click here for an explanation.

Dorothy and her husband meet the earned income test because her husband was a full-time student for at least five months, and is considered to have earned income for those months.

Credit for Child and Dependent Care Expenses Workout

Five Eligibility Tests

Case Study 4: Earned Income Test