topic My pleasure. in Get your taxes done using TurboTax

Married Filing Separately question

bigal0584 — Tue, 04 Jun 2019 20:25:48 GMT

My wife and I are married filing separately. She is claiming our daughter (1 year old) as a dependent. I set aside money in a dependent care account that should be tax free, but TurboTax keeps saying she is over 13. Therefore, TurboTax is adding the dependent care money set aside to my taxable income. Is this a bug in TurboTax?

Edited 6:00 2/4/18 If you had Dependent Care Benefits in...

Coleen3 — Tue, 04 Jun 2019 20:25:49 GMT

Edited 6:00 2/4/18

If you had Dependent Care Benefits in Box 10, W-2 and you file separately, you are generally not entitled to any child care credit and if you did have money dedicated to Child Care on your W-2, it will be taxed.

But, you have to answer that your spouse allows you to take the exemption and that you pay for more than half of the cost of maintaining the home to get credit for any DCB. The entire amount won't be excluded but a portion will be.

Here's what I finally got assuming there were $5000 in box 10 w-2.
It looks like you don't qualify for this credit because you're Married Filing Separately. It's rare to qualify for this credit when you're Married Filing Separately, but we wanted to be sure we didn't miss it if you did.
We see you've reached the allowable limits for both care expenses and care benefits. When you're Married Filing Separately, the most care expenses you can claim is $2,500 and the most care benefits you're allowed is $5,000. Taking these limits into account, $5,000 of your care benefits weren't spent. This amount will be added to your W-2 as taxable income.
How would I qualify for this credit when I'm Married Filing Separately?

Normally to qualify for the Credit:

To qualify for this credit, you must meet all of these criteria:

You (and your spouse, if filing jointly) must have earned income

The earned income requirement for one spouse is waived if s/he was a full-time student or
Disabled, if they lived with the other spouse for more than 6 months in 2017

You paid caregiving expenses so that you (and your spouse, if filing jointly) could work or look for work

The work/look for work requirement for one spouse is waived if s/he was a full-time student or
Disabled, if they lived with the other spouse for more than 6 months in 2017

You paid a caregiver to care for a Qualifying Person. The caregiver cannot be:

Your spouse;
Your dependent;
Your child if they were under 19 on the last day of 2017, even if not your dependent; or
The parent of the Qualifying Person, if the Qualifying Person is your child under the age of 13 during 2017.

You cannot file with the Married Filing Separately filing status
You must furnish the care provider's name, address, and (unless it's a tax-exempt organization) their SSN, ITIN, or EIN on your return.

The non-custodial parent can never claim the Earned Income Credit, Head of Household filing status or the childcare credit, based on that child, even when the custodial parent has released the exemption to him.

Thanks Coleen. We all do live together. I have set aside...

bigal0584 — Tue, 04 Jun 2019 20:25:51 GMT

Thanks Coleen. We all do live together. I have set aside money in a dependent care account so I do not expect to get the Child Care Credit. My issue is that the money is paying for my one year old's day care expenses, and is set to come out of my paycheck tax free. TurboTax is claiming she is over 13 and therefore, the money set aside tax free is being taxed by TurboTax. I was under the impression that even if we file separately, I can still pay for child care expenses tax free.

No, see above. You can't file separately. That could be t...

Coleen3 — Tue, 04 Jun 2019 20:25:52 GMT

No, see above. You can't file separately. That could be the reason the credit is taxable. Otherwise, go back and check the date of birth.

This question is NOT about the Child Care Credit. This is...

bigal0584 — Tue, 04 Jun 2019 20:25:54 GMT

This question is NOT about the Child Care Credit. This is about why Turbo Tax keeps saying my child is 13 years old. She is one year old with her birthday in 2016. I have double and triple checked that I put the correct date in. Turbo Tax keeps telling me my child is ineligible to use Dependent Care Account funds because she is over 13. Therefore Turbo Tax is saying I owe taxes on my Dependent Care Account contributions. She is 1 year old, NOT over 13.

I just worked through the program. The list of reasons yo...

Coleen3 — Tue, 04 Jun 2019 20:25:55 GMT

I just worked through the program. The list of reasons your daughter "is ineligible to use Dependent Care Account funds" starts off with being 13. The program is not saying that is THE reason, it is saying it is a possible reason. You can't have Dependent Care Benefits on your W-2 and not have a child on Form 2441. If there is no child, the DCBs are taxable. She doesn't qualify because you are using the MFS status.

Thanks for following up Coleen. I guess I'm just a little...

bigal0584 — Tue, 04 Jun 2019 20:25:56 GMT

Thanks for following up Coleen. I guess I'm just a little disappointed that the pretax money I thought I wouldn't be taxed on is taxed when using the MFS status.

I haven't totally given up. If you don't hear back, this...

Coleen3 — Tue, 04 Jun 2019 20:25:58 GMT

I haven't totally given up. If you don't hear back, this is the way it has to be. If I have any better news, I will get back to you.

Ok, you have to answer that your spouse allows you to tak...

Coleen3 — Tue, 04 Jun 2019 20:25:59 GMT

Ok, you have to answer that your spouse allows you to take the exemption and that you pay for more than half of the cost of maintaining the home to get credit for any DCB. The entire amount won't be excluded but a portion will be. Here's what I finally got assuming there were $5000 in box 10 w-2.
It looks like you don't qualify for this credit because you're Married Filing Separately. It's rare to qualify for this credit when you're Married Filing Separately, but we wanted to be sure we didn't miss it if you did.
We see you've reached the allowable limits for both care expenses and care benefits. When you're Married Filing Separately, the most care expenses you can claim is $2,500 and the most care benefits you're allowed is $5,000. Taking these limits into account, $5,000 of your care benefits weren't spent. This amount will be added to your W-2 as taxable income.
How would I qualify for this credit when I'm Married Filing Separately?

Thank you again for digging in. I'll give this a try when...

bigal0584 — Tue, 04 Jun 2019 20:26:03 GMT

Thank you again for digging in. I'll give this a try when I get back to my taxes tomorrow.

My pleasure.

Coleen3 — Tue, 04 Jun 2019 20:26:04 GMT

My pleasure.