The IRS has released Form 2441 (Child and Dependent Care Expenses) and its accompanying instructions for the 2019 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 2019 form and instructions are substantially the same as their 2018 counterparts. However, the 2019 items have been revised to include references to the new Form 1040-SR (U.S. Tax Return for Seniors), and to reflect modifications to Form 1040 for 2019. In addition, the 2019 instructions clarify that the special rule for children whose parents are divorced or separated also applies if the parents are living apart.
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 received $5,000 of reimbursements for 2019 (the maximum DCAP exclusion for most taxpayers) can still take a partial DCTC based on up to $1,000 of their 2019 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 XI.D (“Who Is a Qualifying Child Under Code § 152?”), 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.