Publication 503 - Child And Dependent Care Expenses

For purposes of 3(a), a similar statement includes a di-

Costs of keeping up a home. The costs of keeping up a

vorce decree or separation agreement that went into ef-

home normally include property taxes, mortgage interest,

fect after 1984 that allows the noncustodial parent to

rent, utility charges, home repairs, insurance on the home,

claim the child’s exemption without any conditions, such

and food eaten at home.

as payment of support.

Costs not included. The costs of keeping up a home

You can use Figure B to see whether this exception

do not include payments for clothing, education, medical

applies to you. If it applies, only the custodial parent can

treatment, vacations, life insurance, transportation, or

treat the child as a qualifying person. If the exception does

mortgage principal.

not apply, follow the regular rules for a qualifying person

They also do not include the purchase, permanent im-

under Qualifying Person Test, earlier.

provement, or replacement of property. For example, you

cannot include the cost of replacing a water heater. How-

Example. You are divorced and have custody of your

ever, you can include the cost of repairing a water heater.

8-year-old child. You sign Form 8332 to allow your

ex-spouse to claim the exemption. You pay child care

Public assistance benefits. Payments you receive

expenses so you can work. Your child is a qualifying

from a state that you use to keep up your home are funds

person and you, the custodial parent, can claim the credit

provided by the state, not by you. You must provide more

for those expenses, even though your ex-spouse claims an

than half the cost of keeping up your home from your own

exemption for the child.

funds to claim the credit for child and dependent care

expenses.

Custodial parent. You are the custodial parent if, during

the year, you have custody of your child longer than your

Families living together. If you and your family share

child’s other parent has custody.

living space with another family, your family and the other

family are treated as separate households. (This rule ap-

Divorced or separated. For purposes of determining

plies only for purposes of the credit for child and dependent

whether your child is a qualifying person, you are consid-

care expenses.) If you provide more than half the cost of

ered divorced or separated if either of the following ap-

running your household, you are keeping up a home.

plies.

Cost determined monthly. If a qualified person lived with

1) You are divorced or separated under a decree of

you for less than a full year, figure the cost of keeping up

divorce or separate maintenance or a written separa-

your home for that period. To do this, divide your cost for

tion agreement.

the year by 12 and multiply the result by the number of

months the person lived with you. Count any partial month

2) You lived apart from your spouse for all of the last 6

as a full month.

months of the year.

Example. Joe lives in his home all year, but his son,

Keeping Up a Home Test

who is a qualifying person, lives in it only from June 20 to

December 31. The cost of keeping up his home for the full

To claim the credit, you must keep up a home. You and

year is $6,600. To meet the keeping up a home test, Joe

one or more qualifying persons must live in the home.

must pay more than half the cost of keeping up the home

You are keeping up a home if you (and your spouse if

from June 1 to December 31. He figures half the cost as

you are married) pay more than half the cost of running it

follows.

for the year. If you live in your home with a qualifying

person for less than a full year, see Cost determined

Cost of Keeping Up Joe’s Home That He Must Pay

monthly, later.

1) Cost of keeping up the home for the full year . . . . . . .

$ 6,600

÷ 12

2) Divided by the number of months in a year . . . . . . . . .

Home. The home you keep must be the main home for

3) Monthly cost of keeping up the home . . . . . . . . . . . .

550

both you and the qualifying person. Your home can be the

4) Multiplied by number of months the qualifying

× 7

person lived in the home . . . . . . . . . . . . . . . . . . .

main home even if the qualifying person does not live there

5) Cost of keeping up the home while the

all year because of his or her:

qualifying person lived there . . . . . . . . . . . . . . . .

$ 3,850

× .50

6) Multiplied by one-half . . . . . . . . . . . . . . . . . . . . . . .

1) Birth,

7) Half the cost of keeping up the home while the qualifying

person lived there . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,925

2) Death, or

To meet the keeping up a home test, Joe must pay more

3) Temporary absence due to:

than $1,925 to keep up his home from June 1 to December

31.

a) Sickness,

b) School,

Earned Income Test

c) Business,

To claim the credit, you (and your spouse if you are

d) Vacation,

married) must have earned income during the year.

e) Military service, or

Earned income. Earned income includes wages, sala-

f) Custody agreement.

ries, tips, other taxable employee compensation, and net

Page 6

Publication 503 - Child And Dependent Care Expenses - 2002 Page 6

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