If you paid someone to care for a qualifying individual so you (and your spouse if you are married) could work or look for work, you may be able to claim the credit for child and dependent care expenses. If you are married, both you and your spouse must have earned income, 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:

Your dependent who was under age 13 when care was provided and for whom you can claim an exemption. (For exception to the exemption rule for certain custodial parents, refer to Child of Divorced or Separated Parents in Publication 503.) A noncustodial parent, however, cannot treat a child as a qualifying person even if the parent may claim the child's exemption.

Your spouse who was mentally or physically not able to care for himself or herself.

Your dependent who was physically or mentally 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 $3,100 or more of gross income).

In addition to the conditions just described, to take the credit, you must meet all the following conditions:

You (and your spouse, if you are married) must have paid over half of the expenses of a household that was your main home and the main home of a qualifying individual.

You must provide the taxpayer identification number (usually the social security number) of the qualifying person.

Your filing status must be a status other than married filing separate. (You must file a joint return if you are married.)

The payments for care cannot be paid to someone you can claim as your dependent, or to your child who is under age 19 even if he or she is not your dependent.

You must report the name, address, and taxpayer identification number, (either the social security number, or the employer identification number) of the care provider on your return, unless the care provider is tax exempt. You can use Form W-10(PDF), Dependent Care Provider's Identification and Certification, to request this information from the care provider.

If you qualify for the credit, complete Schedule 2 of Form 1040A(PDF), or Form 2441(PDF) with Form 1040(PDF). If you received dependent care benefits from your employer (this amount should be shown in Box 10 of your 2004 Form W-2(PDF)), you must complete Part III of Schedule 2 (Form 1040A) or Form 2441. You cannot use Form 1040EZ if you claim the child and dependent care credit.

The credit is a percentage, based on your adjusted gross income, of the amount of work–related child and dependent care expenses you paid to a care provider. For 2004, you may use up to $3,000 of the expenses paid in a year for one qualifying individual, or $6,000 for two or more qualifying individuals. These dollar limits must be reduced by the amount of any dependent care benefits provided by your employer that you exclude from your income. Refer to Publication 503, Child and Dependent Care Expenses, for additional information.

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

For information on the Child Tax Credit, refer to Publication 17, Your Federal Income Tax.