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Publication 503 2003 Tax Year

Publication 503
Introductory Material

This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

Important Changes

Credit percentage. The credit can be as much as 35% (increased from 30% in 2002) of your qualified expenses. For more information, see Amount of Credit.

Income that qualifies for highest percentage. The maximum adjusted gross income amount that qualifies for the highest credit percentage increased to $15,000. See Amount of Credit.

Dollar limit. The dollar limit on the amount of qualifying expenses increased to $3,000 for one qualifying individual and $6,000 for two or more qualifying individuals. For more information, see Dollar Limit.

Earned income amount for nonworking spouse. If your spouse is either a full-time student or not able to care for himself or herself, the amount of income he or she is treated as having earned has increased to $250 a month if there is one qualifying person and to $500 a month if there are two or more qualifying persons. For more information, see Earned Income Limit.

Important Reminders

Taxpayer identification number needed for each qualifying person. You must include on line 2 of Form 2441, Child and Dependent Care Expenses, or Schedule 2 (Form 1040A), Child and Dependent Care Expenses for Form 1040A Filers, the name and taxpayer identification number (generally the social security number) of each qualifying person. See Taxpayer identification number under Qualifying Person Test, later.

You may have to pay employment taxes. If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer who has to pay employment taxes. Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. See Employment Taxes for Household Employers, later.

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1–800–THE–LOST (1–800–843–5678) if you recognize a child.

Introduction

This publication explains the tests you must meet to claim the credit for child and dependent care expenses. It explains how to figure and claim the credit.

You may be able to claim the credit if you pay someone to care for your dependent who is under age 13 or for your spouse or dependent who is not able to care for himself or herself. The credit can be up to 35% of your expenses. To qualify, you must pay these expenses so you can work or look for work.

This publication also discusses some of the employment tax rules for household employers.

Dependent care benefits.

If you received any dependent care benefits from your employer during the year, you may be able to exclude from your income all or part of them. You must complete Part III of Form 2441 or Schedule 2 (Form 1040A) before you can figure the amount of your credit. See Employer-Provided Dependent Care Benefits under How To Figure the Credit, later.

Comments and suggestions.

We welcome your comments about this publication and your suggestions for future editions.

You can e-mail us at *taxforms@irs.gov. Please put “Publications Comment” on the subject line.

You can write to us at the following address:


Internal Revenue Service
Individual Forms and Publications Branch
SE:W:CAR:MP:T:I
1111 Constitution Ave. NW
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

Useful Items - You may want to see:

Publication

  • 501 Exemptions, Standard Deduction, and Filing Information
  • 926 Household Employer's Tax Guide

Form (and Instructions)

  • 2441
    Child and Dependent Care Expenses
  • Schedule 2 (Form 1040A)
    Child and Dependent Care Expenses for Form 1040A Filers
  • Schedule H (Form 1040)
    Household Employment Taxes
  • W–10
    Dependent Care Provider's Identification and Certification

See How To Get Tax Help, near the end of this publication, for information about getting these publications and forms.

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