The fourth test to qualify is that the child and dependent care expenses must have been paid so that you (and your spouse) could work or look for work. If you are married, both you and your spouse must have worked or looked for work. But, just as in the case of the earned income test, there is an exception if your spouse was a student or was unable to care for himself or herself.
Your work can be full-time or part-time, and can be as an employee or self-employed. But if you were not working, and were looking for a job and did not find one, and you had no earned income, you do not qualify for this credit.
If you work or look for work only part of the year, you will need to calculate your expenses per day, and only the child and dependent care expenses that correspond to the period you work or look for work qualify for the credit. You can take your annual or monthly expenses and divide by the corresponding number of days in order to determine your expenses per day.
Expenses for the Care of a Qualifying Person
The main purpose of the expenses must be the well-being and protection of the child or qualifying person. These expenses do not include food, clothing, education, or entertainment. For example, if you take your child to a nursery school that provides preschool childcare service, your expenses qualify. But expenses to attend first grade or a higher grade are considered education expenses and do not qualify as care expenses.
The cost of placing your child in a daycare center, or placing a qualifying person in a dependent care center qualifies as dependent care expense, if the center meets all state and local regulations. Transportation expenses in taking your qualifying person to and from a care center are not included in work-related expenses.
Amounts you pay to have someone come to your home to care for the qualifying person are considered work-related expenses and qualify for the credit, provided the amounts you pay are primarily for caring for the qualifying person, and not for other work. If the person provides other household services in addition to providing care services, you have to divide the expense. But if the time spent performing other services is minimal in comparison to the time spent providing care services, you do not have to divide the expenses.