4.6.6 Dependent Care Deduction

7 CFR 273.9(d)(4)

The dependent care deduction may be claimed for all dependent care-related costs of a child under 18 or an incapacitated person of any age. There is no cap to the total monthly dependent care costs that may be deducted.

The following expenses may be deducted under the dependent care deduction:

Dependent care-related transportation costs, including transportation costs to and from the care provider. Examples include, but are not limited to, the cost of taxicab fees and bus fees.
Costs associated with an activity or other fee associated with the care provided to the dependent that is necessary for them to participate in the care. Examples include, but are not limited to, the cost of day camp or a field trip.

Determine the monthly allowable dependent care expenses if the dependent care is necessary to enable an individual in the food unit to:

Keep or obtain employment,
Get training or education preparatory for employment,
Comply with FoodShare Employment and Training (FSETFoodShare Employment and Training) requirements, or
Maintain a spot for their childA person's biological, step, or adopted son or daughter, regardless of age. If a child is adopted, the adoption severs the biological tie to the parent.(ren) with their current dependent care provider if one or both parents temporarily lose their ability to meet one of the above requirements.

Do not allow the deduction unless the dependent care is necessary and there is not a capable parentA person's biological, step, or adoptive mother or father regardless of age. Parenthood doesn't have to be verified available in the food unit to provide dependent care.

Example 1

Tim and Jane are married and have one child. Jane states that their child attends daycare two days a week while she looks for work. Although she states that Tim is capable of caring for the children, he is not currently participating in any of the four activities listed above. Do not allow the dependent care deduction.

Example 2

A married couple, Mary and Ian, send their children to Sprouts Daycare while Mary works and Ian attends college. Mary was notified that she will be laid off for one or more months. Mary and Ian are required to make ongoing payments to Sprouts Daycare, whether or not their children attend, in order to maintain a spot for their children at the daycare. Allow the dependent care deduction. Changes in circumstances will be captured at their next renewal or if they report a change in income that exceeds reduced reporting limits.

The provider of the dependent care cannot be a member of the food unit.

Do not allow in-kind payments as a deduction. This includes free rent in exchange for child care. In this case, no income is counted, no rent deduction is allowed, and no child care deduction is allowed.

Example 3

A food unit member is a dependent care provider. They are compensated for providing dependent care by paying no rent. Do not allow the dependent care deduction.

Do not allow a dependent care deduction for the portion an agency pays directly to the dependent care provider. Deduct any amount the food unit actually incurs or pays above the vendored, vouchered, or reimbursed payment.

See the Wisconsin Shares Child Care Subsidy Policy Manual Chapter 2, for further child care policy instructions regarding:

W-2Wisconsin Works Child Care recipients who are also FSET or Learnfare participants. They may not have a co-pay obligation.
Costs above Child Care Deduction.

This page last updated in Release Number: 18-01
Release Date: 01/08/2018
Effective Date: 01/08/2018