The IRS has released Form 2441 (Child and Dependent Care Expenses) and its accompanying instructions for the 2018 tax year. Taxpayers file Form 2441 with Form 1040 to determine the amount of their available dependent care tax credit (DCTC), and DCAP participants must file it with Form 1040 to support the income exclusion for their DCAP reimbursements.
The 2018 form and instructions are substantially the same as their 2017 counterparts. However, the 2018 versions have been revised to reflect the elimination of Form 1040A and changes to Form 1040 for the 2018 tax year. In addition, married taxpayers filing separately (who generally are ineligible for the DCTC) must now check a box confirming that they meet the requirements to be considered unmarried for purposes of claiming the DCTC.
EBIA Comment: The expenses that can be used to calculate the DCTC for a tax year are limited to $3,000 for one qualifying individual and $6,000 for two or more. However, these limits are reduced by the amount of any DCAP reimbursements for the year. Employees who receive $5,000 of reimbursements for 2018 (the maximum DCAP exclusion for most taxpayers) can still take a partial DCTC based on up to $1,000 of their 2018 dependent care expenses that exceed $5,000, if they have two or more qualifying individuals and meet other DCTC requirements. For more information, see EBIA’s Cafeteria Plans manual at Sections XXIII.C (“DCAP Participation vs. Claiming the Dependent Care Tax Credit”) and XXV.H (“Form 2441—Employees Must File It With Their Form 1040”).
Contributing Editors: EBIA Staff.