If a tenant is eligible for the earned income disregard, can the disregarded amounts be used in determining the cap for the childcare expense deduction?
A32: In the case of childcare necessary to permit employment, the amount deducted shall not exceed the amount of employment income that is included in annual income; therefore, the disregarded amounts cannot be used in determining the cap for the childcare expense deduction. (See definition of child care expenses at 24 CFR 5.603.) EXAMPLE: A resident is receiving the benefit of the new earned income disregard. Her salary is $9,000/year, however, only $3,000 of this amount is being included in annual income. The remaining $6,000 is being disregarded. Childcare expenses for her four-year-old daughter tot $3,640/year. The resident’s childcare deduction is capped at $3,000 because this is the amount that is included in annual income.
Related Questions
- If a tenant is eligible for the earned income disregard, can the disregarded amounts be used in determining the cap for the childcare expense deduction?
- Is a public housing tenant who received the first 18 month earned income disregard also entitled to the new earned income disregard?
- When determining Child Care Credit, what is the additional earned income for students or the disabled?
