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@drumdude96 what does it say in Form 2441 Part II Line 25 for the exemption? That’s where the known error is.

It doesn’t have to do with box C or the credit. If you are MFS and set aside $2,500 for dependent care and properly use it for qualifying dependent care then you are exempt from tax on that $2,500 and you put the amount that is exempt from tax in Line 25. That is what the IRS is acknowledging is processing incorrectly. If Line 25 on your form says $0 then you just paid tax on money you shouldn’t have paid.

MFS can be exempt regardless of whether they qualify for the credit. You are correct in that many MFS will not qualify for the credit, and the form is reflecting that accurately, but the XML coding is not programmed properly in the MeF system by the IRS.

So, please let us know what Line 25 of Part II of Form 2441 says on your H&R Block Form.