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ranchen · Jan 22, 2013, 01:12 PM

Hi,

I have a question:

My spouse has no earned income in 2012.

If I choose the filing status as "Married filing jointly" to claim my spouse as an exemption, can I claim my child's daycare expenses?

I am using F2441 to figure out how much credit I can get for child's daycare expenses. I turns out to zero because of zero earned income of my spouse. Is it correct? If it is right, is there any way to maximize the return in this situation?

Thanks

Ran

ebaines · Jan 22, 2013, 01:34 PM

Both you and your spouse must have earned income or must have be looking for work in order to deduct child care expenses.

AtlantaTaxExpert · Jan 22, 2013, 01:40 PM

Ran,

You can claim the Child Care Credit only if:
- your wife is disabled.
- your wife works.
- Your wife is attending school.

ranchen · Jan 22, 2013, 02:16 PM

What if I file as "Married filing separately" status?

On F2441, Line 5:
If married filing jointly, enter your spouse's earned income (if your spouse was a student or was disabled, see the instructions); all others, enter the amount from line 4

ebaines · Jan 22, 2013, 02:20 PM

Yes, if you file separately then you could claim the credit. But be aware that you may end up paying overall tax, since the tax rates for married Filing Separately are higher than for filing jointly. The only way to tell which approach is better to is to run the numbers both ways and see how it turns out, but for the majority of cases filing as MFJ is better, even if you can't claim the dependent care credit.

ranchen · Jan 22, 2013, 02:46 PM

Thanks. If I file as MFS, can I still check the Box 6b (spouse)? If so, the exemptions should be the same, but I will lose some standard deduction for MFJ to MFS.

Could my spouse file tax return seprately without any exemption if I check the Box 6b in my file? Can my spouse claim standard deduction for MFS and get some money? Confused

Thanks for help

ebaines · Jan 22, 2013, 02:54 PM

If you file MFS then you cannot check 6b unless your wife doesn't actually file a return, in which case your exemptions are indeed the same as filing MFJ, but you will find that the higher tax rates for MFS most likely causes a higher overall tax bill than filing MFJ. Check the tax tables in the instructions for Form 1040 and you'll see what I mean, but like I said before - try it both ways and see.

ranchen · Jan 22, 2013, 03:02 PM

Thanks. So I can try three categories:
1. MFJ, no child care credit
2. MFS with spouse as an exemption, use MFS standard deduction, get child care credit, spouse does not file a return
3. MFS without spouse as an exemption, use MFS standard deduction, get child care credit, spouse files a return with herself as an exemption and use MFS standard deduction

Right? Thanks

ebaines · Jan 22, 2013, 03:09 PM

Yes, but... the choice of wherther your wife files or not is driven by her income. If you file MFS she does not need to file her own MFS return if her income is less than $3700, and in fact there is no reason for her to do so. I mention this because even though you've said she doesn't have any earned income for 2012 you haven't said whether she has unearned income to report (dividends, capital gains, etc). If her total income is more than $3700 then she would have to file her own return if you file MFS.