Can I include preschool registration fees and security deposit fees in my total dependent care expenses?

Forum|Forum|6 years ago
June 1, 2019
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Best answer by MichaelL1

The registration fees can be included, and the security deposit can also be included as long as care was provided (if you put a deposit down and then did not enroll your child that cannot be deducted). If you get the security deposit back in a later year, it would have to reduce the day care expenses for that year.

Fees and deposits. Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they aren't directly for care. However, a forfeited deposit isn't for the care of a qualifying person if care isn't provided.

Source: IRS Publication 503, https://www.irs.gov/publications/p503/ar02.html

MichaelL1Answer

Employee

Source: IRS Publication 503, https://www.irs.gov/publications/p503/ar02.html

ncsu201

I have a twist to add to this question. Is there any way to claim a credit for childcare costs incurred in the year before the child was born? In our area daycares are very competitive often requiring that you pay a deposit to secure a spot up to a year or more before you'd actually like for your child to start. This means, in our case, that we've already paid a significant amount for child care in 2020 for a child that won't actually be born until 2021. The trouble is it doesn't seem like there's any way to claim a credit for this cost without having a dependent to attribute the cost to, which we obviously won't have until the child is born.

JohnW152

@ncsu201

You can’t claim these expenses in the year before your child was born.

However… you can claim child care expenses that have been pre-paid, but only in the year the child care is provided. In your case, you’ll claim the expenses on your 2021 (i.e., next year’s) return.

The IRS states in Publication 503, Child and Dependent Care Expenses that

If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. Claim the expenses for the later year as if they were actually paid in that later year. [Bolding mine.]