Childcare for 1st half year before married?

[nwtaxlady]

My client has 1 child of his own that he had to pay for childcare for the first half of the school year while he worked. He has been single and son has lived with him all this time and he has been paying childcare for while he works for years. Come summer he meets a lady and they got married December 2011. She has NO wages. She stays home with child so no more childcare expenses since she moved in with them in August. Question is.... can he have the childcare credit for the childcare he paid for the 1st half of the year when it was just him and his son for while he worked. He hadn't even met the lady until summer.

Or does she "taint" him because she has no wages to report and they got married by before the end of the year and she is not disabled and not a student?

I am just not finding anything that covers this scenario. Any input would be appreciated.
Thanks!

[ChEAr$]

there is nothing I know of which would give him an exception to the rules. Niente. Nada.
Nichts.

On the bright side, getting married has tax benefits in this case of increased standard deduction and her exemption. he can be thankful for that, no?

[taxea]

My client has 1 child of his own that he had to pay for childcare for the first half of the school year while he worked. He has been single and son has lived with him all this time and he has been paying childcare for while he works for years. Come summer he meets a lady and they got married December 2011. She has NO wages. She stays home with child so no more childcare expenses since she moved in with them in August. Question is.... can he have the childcare credit for the childcare he paid for the 1st half of the year when it was just him and his son for while he worked. He hadn't even met the lady until summer.

Or does she "taint" him because she has no wages to report and they got married by before the end of the year and she is not disabled and not a student?

I am just not finding anything that covers this scenario. Any input would be appreciated.
Thanks!

I would include a statement explaining the circumstance and claim it.

[Gary2]

I would include a statement explaining the circumstance and claim it.

I don't see how that will fly. I doubt any software would even allow it without misrepresenting the spouse's situation.

The problem isn't proving that the expenses qualify - as I read the definition, they do. The problem is that the code and the 2441 require an earned income number for both the primary and spouse. There's an explicit exception for imputing earned income for a spouse that is either a student or disabled, but there's no such exception for a period of time when there was no spouse.

It's unfortunate, but that's the way the law is written.

[oceanlovin'ea]

What was she doing the first part of the year before they got together? Any kind of schooling or work then?

Linda, EA

[BP.]

Agree with the no-credit posts. For documentation, the Child Care Expense Pub 503, p. 10 even has an example where the taxpayer married at year end, and the example shows how the credit is limited to the lesser income of the two spouses, which in your case is zero.

http://www.irs.gov/pub/irs-pdf/p503.pdf

[nwtaxlady]

She did not work or go to school

What was she doing the first part of the year before they got together? Any kind of schooling or work then?

Linda, EA

Nope....she did not go to school or work at anytime during the year. I use Lacerte and I don't see an exception to this scenario unless you fudge the facts (mark spouse as disabled or student) which I will NOT do.

BP, thanks for pointing out that example. So I will go with NO credit. Darn it!

[appelman]

When did they move in together?

If it was after the end of the year, you can use the married living apart exception. Otherwise, I have to agree reluctantly with the majority, though you might want to give Taxea's suggestion a try. Nobody ever said the tax code had to be fair!

[taxea]

thanks Appelman

I believe in documenting everything. I use common sense and reasoning when considering various positions. I explain the options and possible consequences to the client and let them decide how to handle the issue. the consequences include a possible letter from the IRS. I have frequently include statements of explanation with returns. Whenever I do this I am confident that the IRS will accept the explanation. So far, I have been successful. I don't do anything outlandish or try to talk the client into anything that may have the least consideration of being outside "the box".
The position I would present on this issue is that the TP was a single dad responsible for his son's support and ordered to put him in daycare. He did this for 6 months until he married.
He should not be denied othe deduction,that was rightfully, his due to his marriage.
I would (Burke-upon TP opting for it) claim the credit and argue the point with the IRS should the TP receive a letter from them. I have not been unsuccessful in the past.
The other thing the preparer could do is call the hotline, run the situation by them and ask how to handle this situation prior to giving the TP either the bad news or the options.

[Gary2]

I believe in documenting everything. I use common sense and reasoning when considering various positions. I explain the options and possible consequences to the client and let them decide how to handle the issue. the consequences include a possible letter from the IRS. I have frequently include statements of explanation with returns. Whenever I do this I am confident that the IRS will accept the explanation. So far, I have been successful. I don't do anything outlandish or try to talk the client into anything that may have the least consideration of being outside "the box".
The position I would present on this issue is that the TP was a single dad responsible for his son's support and ordered to put him in daycare. He did this for 6 months until he married.
He should not be denied othe deduction,that was rightfully, his due to his marriage.
I would (Burke-upon TP opting for it) claim the credit and argue the point with the IRS should the TP receive a letter from them. I have not been unsuccessful in the past.
The other thing the preparer could do is call the hotline, run the situation by them and ask how to handle this situation prior to giving the TP either the bad news or the options.

Would you include an 8275 or 8275-R in this situation, assuming you argued the fairness approach?

[BP.]

When did they move in together? If it was after the end of the year, you can use the married living apart exception.

nwtaxlady provided that info in original post: " . . . she moved in with them in August."

[taxea]

Would you include an 8275 or 8275-R in this situation, assuming you argued the fairness approach?

I haven't thoroughly researched the forms to determine the difference between them so it would depend on the return issue as to whether I would use either, If you have a clear picture as to which is used when please enlighten me. Funny, cause I meant to research that very form to determine whether it would be better to use than a statement of explanation for the few times I may want to include it.

However if I chose not use the actual form (because it doesnt appear to apply to the issue) I would write a statement of explanation in explicit detail including the actual IRC, circumstances that led to the position and a request for review for a positive outcome toward the taxpayer.
This situation is an example of exactly why I feel the outcome would be positive.
1. The TP was single and rasing his dependent for the entire year.
2. The child care was court ordered and he followed the order.
3. The now wife is of no consequence in this case because whether or not she lived with the TP anytime before the marriage....she had no responsibility to care for the child.
4. As stated above the TP paid for 6 months of child care; until after the marrige occurred and should not be punished/denied the credit he would have been entitled to had he not married and filed MFJ.

[ChEAr$]

[QUOTE=taxea;130532

4. As stated above the TP paid for 6 months of child care; until after the marrige occurred and should not be punished/denied the credit he would have been entitled to had he not married and filed MFJ.[/QUOTE]

Should not carries no weight. It's not a question about being punished, or denied anything.
It's all about the tax law and what is allowed "by the grace of congress."

Sorry, no child care credit.

[Jesse]

Should not carries no weight. It's not a question about being punished, or denied anything.
It's all about the tax law and what is allowed "by the grace of congress."

Sorry, no child care credit.

I agree with chEAr$'s, they should've waited until January 2012 to marry.

[FEDUKE404]

Defense strategy

Should not carries no weight. It's not a question about being punished, or denied anything.
It's all about the tax law and what is allowed "by the grace of congress."

Sorry, no child care credit.

I'm definitely gonna have to remember that defense: "Should not be denied."

Perhaps it's like the newborn that arrived in the wee hours of 01/01/2012 but the taxpayer should not be denied the 2011 exemption because of a mere technicality??

Or similarly, I meant to make that payment in 2011 but I just forgot to put it in the mail until January 2nd.

Or my favorite: I did not take that charitable deduction last year, so just ADD it to the list I gave you.

Gotta go....it's obviously been a long day.

FE