The amount of dependent care benefits you can exclude or deduct is limited to the smallest of:

• The total amount of dependent care benefits you received during the year,
• The total amount of qualified expenses you incurred during the year,
• Your earned income,
• Your spouse’s earned income, or
• $5,000 ($2,500 if married filing separately)

Any benefits that are not excluded or deducted are included in your income. Taxable benefits will be reported with your wages on Line 1 of your tax return.

Related Links

• Form 2441 – Credit
• Form 2441 – Credit Calculation
• Form 2441 – Preschool Expenses
• Form 2441 – Paid Amount Equal to Qualified Expenses