Publication 503 - Child And Dependent Care Expenses - 2002 Page 14
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22for their 2001 expenses paid in 2002 is not allowed in 2001.
ployer. If you are a household employer, you will need an
It is allowed for the 2002 tax year, but they must use their
employer identification number (EIN) and you may have to
adjusted gross income for 2001 to compute the amount.
pay employment taxes. If the individuals who work in your
The worksheet they use to figure this credit is shown on the
home are self-employed, you are not liable for any of the
previous page.
taxes discussed in this section. Self-employed persons
Sam and Kate add the $80 from line 13 of this worksheet
who are in business for themselves are not household
to their 2002 credit and enter the total on line 9 of their
employees. Usually, you are not a household employer if
Schedule 2 (Form 1040A). They enter “CPYE $80” and
the person who cares for your dependent or spouse does
their child’s name and SSN in the space to the left of line
so at his or her home or place of business.
9.
If you use a placement agency that exercises control
over what work is done and how it will be done by a
How To Claim the Credit
babysitter or companion who works in your home, that
person is not your employee. This control could include
providing rules of conduct and appearance and requiring
To claim the credit, you can file Form 1040 or Form 1040A.
You cannot claim the credit on Form 1040EZ.
regular reports. In this case, you do not have to pay
employment taxes. But, if an agency merely gives you a list
Form 1040. You must complete Form 2441 and attach it
of sitters and you hire one from that list, the sitter may be
to your Form 1040. Enter the credit on line 46 of your Form
your employee.
1040.
If you have a household employee you may be subject
Form 1040A. You must complete Schedule 2 (Form
to:
1040A) and attach it to your Form 1040A. Enter the credit
on line 29 of your Form 1040A.
1) Social security and Medicare taxes,
Limit on credit. The amount of credit you can claim is
2) Federal unemployment tax, and
limited to the amount of your regular tax (after reduction by
any allowable foreign tax credit) plus your alternative mini-
3) Federal income tax withholding.
mum tax, if any. For more information, see Form 2441 or
Social security and Medicare taxes are generally withheld
Schedule 2 (Form 1040A).
from the employee’s pay and matched by the employer.
Tax credit not refundable. You cannot get a refund for
Federal unemployment (FUTA) tax is paid by the employer
any part of the credit that is more than this limit.
only and provides for payments of unemployment compen-
Recordkeeping. You should keep records of
sation to workers who have lost their jobs. Federal income
your work-related expenses. Also, if your depen-
tax is withheld from the employee’s total pay if the em-
dent or spouse is not able to care for himself or
RECORDS
ployee asks you to do so and you agree.
herself, your records should show both the nature and
For more information on a household employer’s tax
length of the disability. Other records you should keep to
responsibilities, see Publication 926 and Schedule H
support your claim for the credit are described under Pro-
(Form 1040) and its instructions.
vider Identification Test, earlier.
State employment tax. You may also have to pay state
unemployment tax. Contact your state unemployment tax
Employment Taxes
office for information. You should also find out whether you
for Household Employers
need to pay or collect other state employment taxes or
carry worker’s compensation insurance. A list of state
unemployment tax agencies, including addresses and
If you pay someone to come to your home and care for
your dependent or spouse, you may be a household em-
phone numbers, is in Publication 926.
Page 14
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