4.6.6 Dependent Care Deduction

7 CFR 273.9(d)(4)

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 employment and training requirements ( FSET ), or
Maintain a spot for their child (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 parent 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.

Effective October 1, 2008 applicants and members can deduct the total monthly dependent care costs. There is no longer a cap.

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. He or she is 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.

Transportation provided by the child care provider, which is not reimbursed through a child care authorization, is an allowable deduction when the transportation is necessary for the food unit member to seek or maintain employment.

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

W-2 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: 10-02

Release Date: 04/16/10

Effective Date: 04/16/10