If you paid someone to care for your dependent under age 13 or your disabled dependent or spouse so that you could work or look for work, you may be able claim the credit for child and dependent care expenses. If you are married, both spouses must have worked, unless one spouse was either a full-time student or was physically or mentally incapable of self-care. The expenses you paid must have been for the care of one or more of the following qualifying individuals:

1.Your dependent under age 13 for whom you can claim an exemption or for whom you could have claimed an exemption had it not been granted to a noncustodial parent in a written agreement or decree of divorce or separate maintenance;

2.Your spouse who is mentally or physically unable to care for himself or herself; or

3.Your dependent who was not able to care for himself or herself, and for whom you can claim an exemption (or could claim an exemption except the person had $2,550 or more of gross income).

To take the credit, you must meet all the following conditions:

1.You generally must have earned income during the year;

2.The qualifying person must have lived with you in a home kept up by you; and

3.Generally, if married, you must file a joint return.

To qualify for the credit, the expenses must have been paid for the qualifying person's care so that you could work or look for work.

However, you cannot include payments made to your child who was under age 19 at the end of the year, or to a person you could claim as an exemption.

If you qualify for the credit, use Schedule 2 of Form 1040A, or Form 2441, Child and Dependent Care Expenses, with Form 1040. If you received dependent care benefits (this amount should be shown in box 10 of your 1996 Form W-2), you must complete part III of the Schedule 2 or Form 2441. You cannot use Form 1040EZ if you claim the child and dependent care credit. You must report the name, address, and taxpayer identification number, usually the social security number, of the child care provider on your return. You can use Form W-10, Dependent Care Provider's Identification and Certification, to request this information from the care provider. The credit is a percentage, based on your adjusted gross income, of the amount you paid someone to care for the qualifying person. You may use up to $2,400 of the expenses paid in a year for one qualifying person, or $4,800 for two or more qualifying persons. Additional information can be found in Publication 503, Child and Dependent Care Expenses.

If you pay someone to look after your dependent or spouse in your home, you may be a household employer. If you are, you may have to withhold and pay social security and Medicare tax and pay federal unemployment tax. For information on this subject, refer to Publication 926, Household Employer's Tax Guide, or read Topics 756 and 760.

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