Ask the taxgirl: Child Care and Stay at Home Moms

Taxpayer asks:

I’m a stay at home mom (not employed) and my son attends preschool part-time a few days a week. My husband and I file jointly and we live in Arizona (don’t know if that matters). Can we deduct the tuition we pay to the preschool?
Thanks so much!

Taxgirl says:

You’re going to hate this answer – but no. Here’s the reason: to claim the dependent care credit, 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 caring for him or herself. Earned income includes wages, salaries and tips but not pensions, Social Security, worker’s comp, interest and dividends, scholarships or child support payments. Losses from self-employment reduce your taxable income for purposes of the credit.

If you both work, you use the spouse with the least amount of income to figure the credit. So, in 2009, if your husband made $50,000 and you made $3,000, you would be limited to $3,000 as the amount of income used to figure the credit.

The idea behind the credit is to provide relief for those folks who have to pay for care while they work or look for work – the Service actually refers to the income for purposes of the credit as “work related expenses.” So, fair or not, stay at home moms are out of luck when it comes to the dependent care credit – sorry!

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

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Comments

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  2. kc

    So just to double check, same scenario except that I have a couple thousand in income to report from math tutoring on the side and mystery shopping. Would that income work even if its not a “regular” job? It is still income that needs to be reported (and not taxed yet!) even if its not consistent or ‘regular’, so could that be offset with the preschool tuition for the child care credit?

  3. EkoPub

    Same scenario but with a caveat. My wife is/was a stay-at-home mom. Now that our youngest is in pre-school she wants to work again. So technically she is looking for work but hasn’t had a job the whole year. How does IRS qualify that as looking for work so we get the tax credit?

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