I carried over $829 in my dependent care FSA from 2020 to 2021 because my employer elected to allow for it under IRS rule. For 2021, I had $12 withheld and added to my dependent care FSA. So, $841 available for dependent care.
I paid $601 in 2021 for dependent care. Despite entering $601 for "Total dependent care expenses you paid," TurboTax somehow comes back with $829 in "Total Care Expenses" (the total I carried over from 2020).
For "Carryover used in 2021," I entered $601.
TurboTax is now calculating a $166 dependent care credit, which is 20% of the $829.
How is TurboTax coming up with the $829 when I have not entered it anywhere? Is it somehow from the 2020 return (which I filed using TurbTax)? Why is it using a carryover amount for the tax credit calculation and not the expenses paid??
The intent of the dependent care credit is to provide a credit for expenses paid that are in excess of what you use from a dependent care FSA (for which you already receive a tax benefit). TurboTax is giving me a credit on dollars I've already deducted for tax purposes. Is this a glitch? Have I answered something wrong?
TurboTax should be taking my total expenses paid ($601), subtracting the carryover ($829) and the current year withholdings ($12), and applying the 20% to anything remaining (less than $0 for me). If TurboTax was working remotely correctly, it would at least take $601 mins $12 and calculate the credit on that. But it's using carryover dollars as the basis??
