topic Dependent care in Deductions & credits

Dependent care

Faruuq02 — Mon, 09 Mar 2026 05:45:55 GMT

My son is 2 and I work full time and my wife is a full time student. We paid over $5000 for day care fees and our AGI is below $125,000. But TurboTax is only giving us back $1500 dependent care credit instead of 50% of the years daycare expenses (can claim up to $8000 for one child in year 2021 tax return). What am I doing wrong here?

Re: Dependent care

JulieS — Fri, 18 Feb 2022 03:44:10 GMT

You aren't doing it wrong, the amount seems low because it is limited to the lesser of your two incomes. If your spouse did not work during the year, their income is calculated at $250 per month as a student.

I did the calculation based on being a student for 12 months and not having any wages.

$250 X 12 months = $3000 50% = $1500

Re: Dependent care

Faruuq02 — Fri, 18 Feb 2022 04:00:22 GMT

Ok so the amount we paid in child care expenses is not take into consideration at all.

Re: Dependent care

KrisD15 — Fri, 18 Feb 2022 04:25:27 GMT

For this credit, it takes the lesser of the numbers, the expenses (within limits), your income, or your spouse's.

"If you or your spouse is a full-time student or incapable of self-care, then you or your spouse is treated as having earned income for each month that you or your spouse is a full-time student or incapable of self-care. Your or your spouse’s earned income for each month is $250 if there is one qualifying person ($500 if two or more qualifying individuals)."

IRS LINK

Re: Dependent care

Faruuq02 — Fri, 18 Feb 2022 12:47:12 GMT

Thanks!