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Level 6
March 26, 2023
Solved

Child care credit & temporary disability

  • March 26, 2023
  • 3 replies
  • 34 views

Can a taxpayer take the child care credit if on temporary NJ disability/family leave?  Client had 3rd child in June 2022.  Was on leave May 23, 2022 until October 16, 2022.  Two other children went to daycare and summer camp.  Is taxpayer eligible for credit?  It's my understanding that a stay at home parent paying for daycare/child care is not eligible for the credit.  However, this is temporary leave.  Is this an exception?  Thanks for any help.

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Best answer by BobKamman

You are preparing a return for two taxpayers but focused on only one.  The expenses were also incurred by the husband -- it's an interesting point, that he might not have been teaching school during some of the time the wife was at home, but teachers don't typically sit around doing nothing and avoiding work that is employment related during the summer, even if they are not in a classroom.  There is nothing in Section 21 requiring both spouses to be employed at the same time.   For one thing, that would require step-parents to provide care for stepchildren.

3 replies

Just-Lisa-Now-
Intuit Community Champion
March 26, 2023

Were they working prior to going on leave?

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
linda2Author
Level 6
March 26, 2023

Yes, mom is a physical therapist.  Now just remembering dad is a teacher so he's off in the summer.  A new twist.

BobKamman
Level 15
March 26, 2023

You just have to show that both adults had earned income during the year.  There is no monthly analysis.  Both could have worked their keisters off all year but shown a loss on Schedule C:  No credit allowed.  On the other hand, both could have made $5,000 in January then spent the rest of the year jobhunting after being laid off:  Credit allowed.  

rbynaker
Level 13
March 26, 2023

For the expenses to qualify they must be "work-related" meaning incurred to allow you to work or look for work.  See Pub 503:

https://www.irs.gov/pub/irs-pdf/p503.pdf

I think your issue is more in calculating what expenses qualify rather than a binary yes/no credit allowed.

linda2Author
Level 6
March 26, 2023

Yes, I'm trying to determine if she can take the expenses incurred while she was home on temporary maternity/family leave.  

 

 

BobKamman
BobKammanAnswer
Level 15
March 27, 2023

You are preparing a return for two taxpayers but focused on only one.  The expenses were also incurred by the husband -- it's an interesting point, that he might not have been teaching school during some of the time the wife was at home, but teachers don't typically sit around doing nothing and avoiding work that is employment related during the summer, even if they are not in a classroom.  There is nothing in Section 21 requiring both spouses to be employed at the same time.   For one thing, that would require step-parents to provide care for stepchildren.