BillM223
Expert Alumni

Deductions & credits

TurboTax is correct; it is highly unlikely that you don't qualify for the credit, so please don't go trying to fix it.

 

How many children were you paying for? If you had $5,000 in your FSA, then with only one child, you would not be eligible for the Child and Dependent Care Credit.

 

If you had two children you were paying for, then you might be eligible for a small credit. The max you can use in the credit calculation for one child is $3,000. But you can't apply this $3,000 to both the FSA and the credit, so no credit for one child.

 

For two (or more) children, the max you can use in the credit calculation is $6,000. Since the FSA max is $5,000, this leaves $1,000 not used for the FSA which could be applied to the credit. Hence, taxpayers in this situation often end up with small credit on that $1,000 (it's a percentage based on taxpayer income, see form 2441).

 

The usual situation is that the vast amount of childcare expenses bring no tax benefits, because of these limitations.

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