Hi @Opus 17 , I have the same situation where dependent care expense is less than DCFSA .
The dependent care cost is $1000 and the DCFSA is $1500.
(A) Are the following steps of reporting the 'FSA' & 'dependent care credit' correct?
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1. Box 10 of W2 is automatically filled up through the import of W2
2. "Did XXX provide child or dependent care on-side at your workplace?" --> No
3. "Did you have a Flexible Spending Account to pay for child or dependent care?" --> Yes
4. "Any leftover money from your Flexible Spending Account?" --> $500
In Child and Dependent Care Credit section,
5. "How much did you pay for CHILD1's care in 2020? Be sure to also include money paid from a Flexible Spending Account (FSA) or cafeteria plan. Total dependent care expenses you paid for CHILD1" --> $550
6. "How much did you pay for CHILD2's care in 2020? Be sure to also include money paid from a Flexible Spending Account (FSA) or cafeteria plan. Total dependent care expenses you paid for CHILD2" --> $450
7. In "Here's what we have so far" page,
It has this note => "You have $$DCFSA$$ of employer-provided care benefits. In order to received this credit, your expenses below must be more than this amount"
In the table, it shows CHILD1 = $1; CHILD2 = $0; Total Care Expenses = $1.
8. Entered the the actual costs on all the care providers. Total Care Provided Expenses = $1000
9. "Did you pay for any 2019 care in 2020?" --> No
10. Carryover from 2019 Used in 2020?" ---> 0
12. In "Your Child and Dependent Care Credit Summary" page, it shows the following:
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Eligible dependent care expenses: $1001
Dependent care benefit from your W-2 or business schedules: -$1000
Expenses eligible for credit: $1
Credit percentage: XX%
Your Child and Dependent Care Credit: $0
Dependent care benefits you must pay taxes on: $1
We've included $1 of your benefit in your taxable income.
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13. Checked on Form1040 Line1, it is labeled with 'DCB', amount = W2-box1 + $1.
(B) If (A)'s answer is Yes, then why the eligible dependent care expenses is not $1000? Why there is $1 assigned to CHILD1? (context: a concern of whether TurboTax is providing the right methodology of calculating the tax outcome on the dependent care credit as taken into account of FSA)
(C) If (A)'s answer is No, then what is the correct way of handling the dependent care credit section?
(D) Since the child care credit is $0, I once deleted CHILD1, CHILD2 dependent expense from the 'Dependent Care Section'. I realized that in Form 1040, on Line1, it is noted with 'DCB', the amount is way more than the amount of W-2 box1. How come?
Thank you.
