U.S. Individual Income Tax Return

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Page 1 of 4 of 2008 Instructions for Schedule 2 (Form 1040A)

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Department of the Treasury
Internal Revenue Service

2008 Instructions for Schedule 2 (Form 1040A)
If you paid someone to care for your child or other qualifying person so you (and your
spouse if filing jointly) could work or look for work in 2008, you may be able to take the
Child and
credit for child and dependent care expenses. You (and your spouse if filing jointly) must
earned income to take the credit. (But see the instructions for line 5 if your spouse was a
Dependent Care have
full-time student or disabled.) If you can take the credit, use Schedule 2 to figure the amount
of your credit.
If you (or your spouse if filing jointly) received any dependent care benefits for 2008, you
Expenses for
must use Schedule 2 to figure the amount, if any, of the benefits you may exclude from your
income on Form 1040A, line 7. You must complete Part III of Schedule 2 before you can
Form 1040A
figure the credit, if any, in Part II.
See Pub. 503 for more details.
Filers
Additional information.

Definitions
Dependent care benefits
Dependent care benefits include:
• Amounts your employer paid directly to either you or your
care provider for the care of your qualifying person(s) while you
worked,
• The fair market value of care in a daycare facility provided or
sponsored by your employer, and
• Pre-tax contributions you made under a dependent care flexible spending arrangement (FSA).
Your salary may have been reduced to pay for these benefits. If
you received dependent care benefits as an employee, they should
be shown in box 10 of your 2008 Form(s) W-2.
Qualifying person(s). A qualifying person is:

• A qualifying child under age 13 whom you can claim as a
dependent. If the child turned 13 during the year, the child is a
qualifying person for the part of the year he or she was under age
13.
• Your disabled spouse who is not physically or mentally able to
care for himself or herself.
• Any disabled person who is not physically or mentally able to
care for himself or herself whom you can claim as a dependent (or
could claim as a dependent except that the person had gross income
of $3,500 or more or filed a joint return.)
• Any disabled person who is not physically or mentally able to
care for himself or herself whom you could claim as a dependent
except that you (or your spouse if filing jointly), could be claimed
as a dependent on another taxpayer’s 2008 return.
If you are divorced or separated, see Special rule for children of
divorced or separated parents on this page.
To find out who is a qualifying child and who is a dependent, see
Pub. 501, Exemptions, Standard Deduction, and Filing Information.

To be a qualifying person, the person must have lived
with you for more than half of 2008.

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Special rules may apply for people who had to relocate
because of the Midwestern storms, tornadoes, or flooding. For details, see Pub. 4492-B.

Special rule for children of divorced or separated parents.
Even if you cannot claim your child as a dependent, he or she is
treated as your qualifying person if:
• The child was under age 13 or was physically or mentally not
able to care for himself or herself, and
• You were the child’s custodial parent (the parent with whom
the child lived for the greater part of 2008).
The noncustodial parent cannot treat the child as a qualifying
person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated
parents.
Qualified expenses. These include amounts paid for household

services and care of the qualifying person while you worked or
looked for work. Child support payments are not qualified expenses. Also, expenses reimbursed by a state social service agency
are not qualified expenses unless you included the reimbursement
in your income.
Generally, if you worked or actively looked for work during
only a part of the period in which you incurred the expenses, you
must figure your expenses for each day. However, there are special
rules for temporary absences or part-time work. See Pub. 503 for
details.
Household services. These are services needed to care for the
qualifying person as well as to run the home. They include, for
example, the services of a cook, maid, babysitter, housekeeper, or
cleaning person if the services were partly for the care of the qualifying person. Do not include services of a chauffeur or gardener.
You can also include your share of the employment taxes paid
on wages for qualifying child and dependent care services.
Care of the qualifying person. Care includes the cost of services
for the qualifying person’s well-being and protection. It does not
include the cost of clothing or entertainment.
You can include the cost of care provided outside your home for
your dependent under age 13 or any other qualifying person who
regularly spends at least 8 hours a day in your home. If the care was
provided by a dependent care center, the center must meet all applicable state and local regulations. A dependent care center is a place
that provides care for more than six persons (other than persons
who live there) and receives a fee, payment, or grant for providing
services for any of those persons, even if the center is not run for
profit.
You can include amounts paid for items other than the care of
your child (such as food and schooling) only if the items are incidental to the care of the child and cannot be separated from the total
cost. But do not include the cost of schooling for a child in kinder-

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garten or above. You can include the cost of a day camp, even if it
specializes in a particular activity, such as soccer. But, do not include any expenses for sending your child to an overnight camp,
summer school, or a tutoring program.

If you have more than two care providers, attach a statement to
your return with the required information. Be sure to put your name
and social security number (SSN) on the statement. Also, enter “See
Attached” right above the Caution under line 1.

Medical expenses. Some disabled spouse and dependent care
expenses may qualify as medical expenses if you itemize deductions. But you must use Form 1040. However, you cannot claim the
same expense as both a dependent care expense and a medical expense. See Pub. 502 and Pub. 503 for details.

Due diligence. You can show a serious and earnest effort (due diligence) to get the information by keeping in your records a Form
W-10 completed by the care provider. Or you may keep one of the
other sources of information listed in the instructions for Form
W-10. If the provider does not give you the information, complete
the entries you can on line 1. For example, enter the provider’s
name and address. Enter “See Attached Statement” in the columns
for which you do not have the information. Then, attach a statement
to your return explaining that the provider did not give you the
information you requested.

Who Can Take the Credit or Exclude
Dependent Care Benefits?
You can take the credit or the exclusion if all five of the following
apply.
1. Your filing status is single, head of household, qualifying
widow(er) with dependent child, or married filing jointly. But see
Married persons filing separately below.
2. The care was provided so you (and your spouse if filing
jointly) could work or look for work. However, if you did not find a
job and have no earned income for the year, you cannot take the
credit or the exclusion. But if your spouse was a student or disabled,
see the instructions for line 5.
Note. Child support payments received by you are not included in

your gross income and are not considered as earned income for
figuring this credit.
3. The care must be for one or more qualifying persons.
4. The person who provided the care was not your spouse, the
parent of your qualifying child, or a person whom you can claim as
a dependent. If your child provided the care, he or she must have
been age 19 or older by the end of 2008 and he or she cannot be
your dependent.
5. You report the required information about the care provider
on line 1 and, if taking the credit, the information about the qualifying person on line 2.
Married persons filing separately. If your filing status is married

filing separately and all of the following apply, you are considered
unmarried for purposes of figuring the credit and the exclusion on
Schedule 2.
• You lived apart from your spouse during the last 6 months of
2008,
• The qualifying person lived in your home more than half of
2008, and
• You provided over half the cost of keeping up your home.
If you meet all the requirements to be treated as unmarried and
meet items 2 through 5 listed earlier, you can take the credit or the
exclusion. If you do not meet all the requirements to be treated as
unmarried, you cannot take the credit. However, you can take the
exclusion if you meet items 2 through 5.

Columns (a) and (b). Enter the care provider’s name and address. If
you were covered by your employer’s dependent care plan and your
employer furnished the care (either at your workplace or by hiring a
care provider), enter your employer’s name in column (a). Next,
enter “See W-2” in column (b). Then, leave columns (c) and (d)
blank. But if your employer paid a third party (not hired by your
employer) on your behalf to provide the care, you must give information on the third party in columns (a) through (d).
Column (c). If the care provider is an individual, enter his or her
social security number (SSN). Otherwise, enter the provider’s employer identification number (EIN). If the provider is a tax-exempt
organization, enter “Tax-Exempt.”
U.S. citizens and resident aliens living abroad. If you are living
abroad, your care provider may not have, and may not be required
to get, a U.S. taxpayer identification number (for example, an SSN
or EIN). If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider’s taxpayer identification
number.
Column (d). Enter the total amount you actually paid in 2008 to the
care provider. Also, include amounts your employer paid to a third
party on your behalf. It does not matter when the expenses were
incurred. Do not reduce this amount by any reimbursement you
received.

Part II
Credit for Child and Dependent Care
Expenses
Line 2
Complete columns (a) through (c) for each qualifying person. If you
have more than two qualifying persons, attach a statement to your
return with the required information. Be sure to put your name and
social security number (SSN) on the statement. Also, enter “See
Attached” in the space to the left of line 3.

Line 1

Column (b). You must enter the qualifying person’s SSN. Be sure
the name and SSN entered agree with the person’s social security
card. Otherwise, at the time we process your return, we may reduce
or disallow your credit. If the child was born and died in 2008 and
did not have an SSN, enter “Died” in column (b) and attach a copy
of the child’s birth certificate, death certificate, or hospital medical
records. To find out how to get an SSN, see Social Security Number
(SSN) on page 17 of the Form 1040A instructions. If the name or
SSN on the person’s social security card is not correct, call the
Social Security Administration at 1-800-772-1213.

Complete columns (a) through (d) for each person or organization
that provided the care. You can use Form W-10 or any other source
listed in its instructions to get the information from the care provider. If you do not give correct or complete information, your
credit (and exclusion, if applicable) may be disallowed unless you
can show you used due diligence in trying to get the required information.

Column (c). Enter the qualified expenses you incurred and paid in
2008 for the person listed in column (a). Prepaid expenses are
treated as paid in the year the care is provided. Do not include in
column (c) qualified expenses:
• You incurred in 2008 but did not pay until 2009. You may be
able to use these expenses to increase your 2009 credit.

Part I
Persons or Organizations Who Provided the
Care

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• You incurred in 2007 but did not pay until 2008. Instead, see
the instructions for line 9.
• You prepaid in 2008 for care to be provided in 2009. These
expenses can only be used to figure your 2009 credit.
If you paid qualified expenses for the care of two or
more qualifying persons, the $6,000 limit does not need
to be divided equally. For example, if you incurred and
paid $2,500 of qualifying expenses for the care of one
qualifying person and $3,500 for the care of another qualifying person, you can use the total, $6,000, to figure the credit.

dents or disabled, only one of you can be treated as having earned
income in that month.
For any month that your spouse was not a student or disabled,
use your spouse’s actual earned income if he or she worked during
the month.

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Special rules may apply for people who had to relocate
because of the Midwestern storms, tornadoes, or flooding. For details, see Pub. 4492-B.

Line 4

Line 9

If filing jointly, figure your and your spouse’s earned income separately. Enter your earned income on line 4 and your spouse’s earned
income on line 5. If your spouse was a student or disabled, see the
instructions for line 5.

Credit for prior year’s expenses. If you had qualified expenses for
2007 that you did not pay until 2008, you may be able to increase
the amount of your 2008 credit. To figure the credit, see the worksheet under Amount of Credit in Pub. 503. If you can take a credit
for your 2007 expenses, enter the amount of the additional credit
and “CPYE” in the space to the left of line 9. Add the additional
credit to the current year amount on line 9, and replace the amount
on line 9 with that total. Also, attach a statement to your tax return
showing the name and taxpayer identification number of the person
for whom you paid the prior year’s expenses, and how you figured
the credit.

Earned income for figuring the credit includes the following
amounts.
1. The amount shown on Form 1040A, line 7, minus any
amount:
a. Included for a scholarship or fellowship grant that was not
reported to you on a Form W-2,
b. Received for work performed while an inmate in a penal institution, and
c. Received as a pension or annuity from a nonqualified deferred
compensation plan or a nongovernmental section 457(b) plan. This
amount may be reported in box 11 of your Form W-2. If you received such an amount but box 11 is blank, contact your employer
for the amount received as a pension or annuity.
2. Nontaxable combat pay, if you elect to include it in earned
income. However, including this income will only give you a larger
credit if your (or your spouse’s) other earned income is less than the
amount entered on line 3. To make the election, include all of your
nontaxable combat pay in the amount you enter on line 4 (line 5 for
your spouse if married filing jointly). If you are filing jointly and
both you and your spouse received nontaxable combat pay, you can
each make your own election. The amount of your nontaxable combat pay should be shown in box 12 of your Form(s) W-2 with code
Q.

You can choose to include your nontaxable combat pay
in earned income when figuring your credit, even if you
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choose not to include it in earned income for the earned
income credit (EIC) or the exclusion or deduction for
child and dependent care benefits.

Special Situations
If you are filing jointly, disregard community property laws. If your
spouse died in 2008, see Pub. 503. If your spouse was a student or
disabled in 2008, see the instructions for line 5.

Line 5

Part III
Dependent Care Benefits
Line 13
If you had an employer-provided dependent care plan, your employer may have permitted you to carry forward any unused amount
from 2007 to use during a grace period in 2008. Enter on line 13 the
amount you carried forward and used in 2008 during the grace period.

Line 14
If you had an employer-provided dependent care plan, enter on line
14 the total of the following amounts included on line 12.
• Any amount you forfeited. You forfeited an amount if you did
not receive it because you did not incur the expense. Do not include
amounts you expect to receive at a future date.
• Any amount you did not receive but are permitted by your
employer to carry forward and use in the following year during a
grace period.
Example. Under your employer’s dependent care plan, you
chose to have your employer set aside $5,000 to cover your 2008
dependent care expenses. The $5,000 is shown in box 10 of your
Form W-2. In 2008, you incurred and were reimbursed for $4,950
of qualified expenses. You would enter $5,000 on line 12 and $50,
the amount forfeited, on line 14. You would also enter $50 on line
14 if, instead of forfeiting the amount, your employer permitted you
to carry the $50 forward to use during the grace period in 2009.

Spouse who was a student or disabled. Your spouse was a full-time

Line 15

student if he or she was enrolled as a full-time student at a school
during any 5 months of 2008. A school does not include an
on-the-job training course, correspondence school, or a school offering courses only through the Internet. Your spouse was disabled
if he or she was not physically or mentally capable of self-care.
Figure your spouse’s earned income on a monthly basis.

Add the amounts on lines 12 and 13 and subtract from that total, the
amount on line 14. Enter the result on line 15.

For each month or part of a month your spouse was a student or
was disabled, he or she is considered to have worked and earned
income. His or her earned income for each month is considered to
be $250 ($500 if more than one qualifying person was cared for in
2008). If your spouse also worked during that month, use the higher
of $250 (or $500) or his or her actual earned income for that month.
If, in the same month, both you and your spouse were either stu-

Line 16
Enter the total of all qualified expenses incurred in 2008 for the care
of your qualifying person(s). It does not matter when the expenses
were paid.
Example. You received $2,000 in cash under your employer’s
dependent care plan for 2008. The $2,000 is shown in box 10 of
your Form W-2. Only $900 of qualified expenses were incurred in
2008 for the care of your 5-year-old dependent child. You would
enter $2,000 on line 12 and $900 on line 16.

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For purposes of line 18, earned income does not include
any dependent care benefits shown on line 12.

Line 18
If filing jointly, figure your and your spouse’s earned income separately. Enter your earned income on line 18 and your spouse’s
earned income on line 19. If your filing status is married filing
separately or your spouse was a student or disabled, see the instructions for line 19.
Earned income for figuring the amount of dependent care benefits you are able to exclude from your income includes the following amounts.
1. The amount shown on Form 1040A, line 7, minus any
amount:
a. Included for a scholarship or fellowship grant that was not
reported to you on a Form W-2,
b. Received for work performed while an inmate in a penal institution, and
c. Received as a pension or annuity from a nonqualified deferred
compensation plan or a nongovernmental section 457(b) plan. This
amount may be reported in box 11 of your Form W-2. If you received such an amount but box 11 is blank, contact your employer
for the amount received as a pension or annuity.
2. Nontaxable combat pay, if you elect to include it in earned
income. However, including this income will only give you a larger
exclusion if your (or your spouse’s) other earned income is less than
the amount entered on line 17. To make the election, include all of
your nontaxable combat pay in the amount you enter on line 18 (line
19 for your spouse if filing jointly). If you are filing jointly and both
you and your spouse received nontaxable combat pay, you can each
make your own election. The amount of your nontaxable combat
pay should be shown in box 12 of Form(s) W-2 with code Q.

Special Situations
If you are filing jointly, disregard community property laws. If your
spouse died in 2008, see Pub. 503. If your spouse was a full-time
student or disabled in 2008, see the instructions for line 5.

Line 19
If your filing status is married filing separately, see Married persons
filing separately on page 2. Are you considered unmarried under
that rule?

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Yes.

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No.

You can choose to include your nontaxable combat pay
in earned income when figuring your exclusion, even if
you choose not to include it in earned income for the
earned income credit (EIC) or the credit for child and
dependent care expenses.

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Enter your earned income (from line 18) on line
19. On line 21, enter the smaller of the amount
from line 20 or $5,000.
Enter your spouse’s earned income on line 19. If
your spouse was a full-time student or disabled in
2008, see the instructions for line 5. On line 21,
enter the smaller of the amount from line 20 or
$2,500.