You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
optional self-employment income would be the maximum $5,440, which is less than<br />
$6,666 ($10,000 × 2/3).<br />
For DCB purposes, earned income to include on Form 2441 is equal to the optional selfemployment<br />
income less one-half of self-employment tax. Continuing <strong>with</strong> the example,<br />
earned income would be $5,024 ($5,440 – $416) and the entire $5,000 DCB would be taxfree.<br />
If the client doesn’t qualify for the optional method the DCB would be taxable.<br />
The optional method is usually beneficial for taxpayers, but the tax savings as well as any<br />
changes to refundable credit calculations (earned income credit and additional child tax<br />
credit) should be weighed against the self-employment tax obligation. The optional<br />
method may be used for a maximum of five years.<br />
See the Form 2441 Instructions and <strong>Sch</strong>edule SE Instructions.<br />
H&R Block Info<br />
Originally published in the 10/23/19 edition of TAX in the News<br />
Legal & IRS Information<br />
IRS Publications<br />
Pub. 503, <strong>Child</strong> and Dependent Care Expenses<br />
IRS Forms/Instructions<br />
<strong>Sch</strong>edule SE (Form 1040) Instructions<br />
Form 2441 Instructions<br />
Copyright info: ©2019 The Tax Institute at H&R Block. All rights reserved. If you would like<br />
to publish or use any part of this content, you must receive permission in writing prior to<br />
use.