Thank you for your response. My question is about the DCAP. I already knew that I couldn't take the credit because I file separately and did not live apart for over 6 months. I am wanting to know if it was correct to claim all of the money my employer paid my daughter's day care as my personal income, and I believe I found my answer it should only be the amount my employer paid the school over $2500 that is legally taxable (edited to add $5000 if filing jointly, but turbo tax software won't be an issue if you file jointly, just if you file separately which is uncommon). I believe that is the threshold I was looking for, but I would like to find that on an IRS page if you have knowledge on that to verify (link to non IRS page below). Turbo tax is incorrectly claiming it is ALL as income. I *think* I have found a work around for anyone else that has this uncommon tax issue. Even though you are unable to take the take credit/exemption, in order for turbo tax to NOT count the amount as income, you MUST go fill out the dependent care expenses form even though you know you don't qualify for that. Turbo Tax will then tell you that you are ineligible for the tax credit BUT the key is they will update your taxable income and remove the $2500 from your taxable income the calculations. Hope that helps someone else (and makes sens). Thank you again.
https://www.nbsbenefits.com/wp-content/uploads/2017/01/DCAP-Info-Sheet.pdf
"The Dependent Care Assistance Program (DCAP) allows you to use tax-free dollars to pay for child day care or elder day care expenses that you incur because you and your spouse are both gainfully employed. To participate, determine the annual amount that you want to deduct from your paycheck before taxes. The maximum amount you can elect depends on your federal tax filing status ($5,000 if you are married and filing a joint return or if you are a single parent, $2,500 if you are married but filing separately) Your annual amount will be divided by the number of pay periods in the plan year and that amount will be deducted from each paycheck."
