Instructions For Schedule 2 (Form 1040a) 2006 (Page 3 of 3) in pdf

Line 15

Line 5

Add the amounts on lines 12 and 13 and subtract from that total, the

Your spouse was a student

Spouse who was a student or disabled.

amount on line 14. Enter the result on line 15.

if he or she was enrolled as a full-time student at a school during

any 5 months of 2006. A school does not include an on-the-job

Line 16

training course, correspondence school, or a school offering courses

only through the Internet. Your spouse was disabled if he or she was

Enter the total of all qualified expenses incurred in 2006 for the care

not capable of self-care. Figure your spouse’s earned income on a

of your qualifying person(s). It does not matter when the expenses

were paid.

monthly basis.

Example. You received $2,000 in cash under your employer’s

For each month or part of a month your spouse was a student or

dependent care plan for 2006. The $2,000 is shown in box 10 of

disabled, he or she is considered to have worked and earned in-

your Form W-2. Only $900 of qualified expenses were incurred in

come. His or her earned income for each month is considered to be

2006 for the care of your 5-year-old dependent child. You would

at least $250 ($500 if more than one qualifying person was cared for

enter $2,000 on line 12 and $900 on line 16.

in 2006). If your spouse also worked during that month, use the

higher of $250 (or $500) or his or her actual earned income for that

Line 18

month. If, in the same month, both you and your spouse were either

students or disabled, only one of you can be treated as having

Earned income for figuring the amount of dependent care benefits

earned income in that month.

you are able to exclude from your income includes the following

amounts. If filing a joint return, figure your and your spouse’s

For any month that your spouse was not a student or disabled,

earned income separately.

use your spouse’s actual earned income if he or she worked during

the month.

1. The amount shown on Form 1040A, line 7, minus (a) any

amount included for a scholarship or fellowship grant that was not

Special rules may apply for people who had to relocate

reported to you on a Form W-2, and (b) any amount received as a

because of Hurricane Katrina, Rita, or Wilma. See Pub.

pension or annuity from a nonqualified deferred compensation plan

4492 for details.

or a nongovernmental section 457(b) plan. This amount may be

reported in box 11 of your Form W-2. If you received such an

amount but box 11 is blank, contact your employer for the amount

Line 9

received as a pension or annuity.

Credit for prior year’s expenses.

If you had qualified expenses for

2. Nontaxable combat pay if you elect to include it in earned

2005 that you did not pay until 2006, you may be able to increase

income. However, including this income will only give you a larger

the amount of your 2006 credit. To figure the credit, see the work-

exclusion if your (or your spouse’s) other earned income is less than

sheet under Amount of Credit in Pub. 503. If you can take a credit

the amount entered on line 17. To make the election, include all of

for your 2005 expenses, enter the amount of the credit and “CPYE”

your nontaxable combat pay in the amount you enter on line 18 (line

in the space to the left of line 9. Also, enter the name and social

19 for your spouse if filing jointly). If you are filing a joint return

security number of the person for whom you paid the prior year’s

and both you and your spouse received nontaxable combat pay, you

expenses next to this amount. Then, add the credit to the amount on

can each make your own election. The amount of your nontaxable

line 9 and replace the amount on line 9 with that total. Also, attach a

combat pay should be shown in box 12 of Form(s) W-2 with

statement showing how you figured the credit.

code Q.

For purposes of line 18, earned income does not include

Part III

any dependent care benefits shown on line 12.

Dependent Care Benefits

Line 13

Special Situations

If you had an employer-provided dependent care plan, your em-

If you are filing a joint return, disregard community property laws.

ployer may have permitted you to carry forward any unused amount

If your spouse died in 2006, see Pub. 503. If your spouse was a

from 2005 to use during a grace period in 2006. Enter on line 13 the

student or disabled in 2006, see the instructions for line 5.

amount you carried forward and used in 2006 during the grace pe-

Line 19

riod.

If your filing status is married filing separately, see Married persons

Line 14

filing separate returns on page 2. Are you considered unmarried

If you had an employer-provided dependent care plan, enter on line

under that rule?

14 the total of the following amounts included on line 12.

•

Yes.

Enter your earned income (from line 18) on line

Any amount you forfeited. You forfeited an amount if you did

not receive it because you did not incur the expense. Do not include

19. On line 21, enter the smaller of the amount

amounts you expect to receive at a future date.

from line 20 or $5,000.

•

Any amount you did not receive but are permitted by your

No.

Enter your spouse’s earned income on line 19. If

employer to carry forward and use in the following year during a

your spouse was a student or disabled in 2006,

grace period.

see the instructions for line 5. On line 21, enter

Example. Under your employer’s dependent care plan, you

the smaller of the amount from line 20 or $2,500.

chose to have your employer set aside $5,000 to cover your 2006

dependent care expenses. The $5,000 is shown in box 10 of your

Form W-2. In 2006, you incurred and were reimbursed for $4,950

of qualified expenses. You would enter $5,000 on line 12 and $50,

the amount forfeited, on line 14. You would also enter $50 on line

14 if, instead of forfeiting the amount, your employer permitted you

to carry the $50 forward to use during the grace period in 2007.

Sch. 2-3

Instructions For Schedule 2 (Form 1040a) 2006 Page 3

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