Thank you for the reply. I had already considered your solution, but that would only give me $750 of imputed income, and it would have been saying my spouse was disabled instead of deceased. However, I believe I found the answer.
I switched to "Forms" mode and selected Form 2441. Halfway down Part II there is a box that says "Married Filing Jointly Smart Worksheet for Student/Disabled Person's Earned Income" Option C in that box says "Check the box if the taxpayer or spouse died...." I checked the box, my spouse's income was disregarded, and everything calculated correctly.
I am very disappointed with Turbo Tax. I reviewed all of the interview questions, and there were no questions that would have prompted that box to be checked. I would think if the taxpayer is widowed, the spouse died during the tax year, and Child and Dependent Care expenses were entered, TurboTax should generate an interview question asking if the deceased spouse's income should be disregarded. If I didn't happen to notice that little box, I would have paid an extra $600 in tax.
