CHILD CARE TAX CREDIT – SHARED RESIDENCY OR EPT

We recently received an inquiry from a subscriber asking why the program doesn’t split the Child Care Tax Credit between the parents in proportion to their contributions to the expense.  Specifically, she asked “Why doesn’t the software the daycare tax credit to both parents in a shared residency calculation?” Upon inquiry, we learned the factual scenario involved a single child being shared under an “Equal Parenting Time” (EPT) agreement.

As previously discussed, the IRS limits the Child Care Tax Credit to the custodial parent of a child under the age of 13, and has no provision for “splitting” the credit, even though both parents pay a portion of the child care expense. Thus, designating the mother as the “resides with” (custodial) parent of the child means only Mom gets the Child Care Tax Credit.

The Child Support Worksheet prepared by the program does, however, in Section F. allocate the net difference between the parents’ EPT support obligations (including the contribution of each parent to the child care expenses) between the parents.

The “Resides With” setting thus takes on added significance (since it indicates the child’s physical custodian), even in Equal Parenting Time situations when you might think the “Resides With” setting would be irrelevant since each parent has equal physical custody.

Just be sure to designate the “Resides With” parent as the one whose daycare expenses should be reduced by the Federal Child Care Tax Credit on page 2 of the Child Support Worksheet.

Remember, if the F1 (Help) key doesn’t provide the answer to your question, let us know!

We always welcome inquiries from our subscribers

Brad and Randy

About Brad Short

CEO : Bradley Software; Of Counsel at Short, Borth & Thilges, Attorneys at Law, LLC, Overland Park, Kansas. Born Birmingham, Alabama, December 27, 1941; admitted to bar,1966, Kansas and U.S. District Court, District of Kansas; 1975, U.S. Court of Appeals, Tenth Circuit; 1976, U.S. Supreme Court. Education: University of Colorado (B.A., 1963; J.D., 1966). Contributing Author, Practitioner's Guide to Kansas Family Law, Kansas Bar Association, 1997. Listed in: The Best Lawyers in America, Family Law, every year from 1987 through 2013. Member, Technology Advisory Committee, Kansas Judicial Council, 1991-1998. Member: Bourbon County, 1966-1977 (President, 1970-1971), Johnson County (Member: Ethics and Grievance Committee, 1984-1998; Family Law Bench/Bar Committee, 1984-), Kansas and American (Vice-Chair, Solo Practitioners and Small Firms Committee, Economics of Law Practice Section, 1984-1985) Bar Associations; Kansas Trial Lawyers Association, 1974-1984 (State Treasurer, 1975-76; Member, Board of Governors, 1974-1984). Fellow, American Academy of Matrimonial Lawyers, 1994-2013 . Practice areas: Family Law.
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