Since the earned income disallowance (EID) reduces the amount of annual income, how does this affect the amount of childcare expenses a family qualifies for?
If the childcare is necessary to permit employment, per 24 CFR 5.603, the amount of the childcare deduction cannot exceed the amount of employment income included in annual income. For example, if a family member earns $15,000 a year but because they qualify for EID, only $5,000 is included in the calculation of annual income, the amount of childcare expenses that can be deducted from annual income is limited to $5,000.
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