My VA state won't accept full dependent care amount of 8k with error "Cannot be larger than federal", only accepts the federal credit of 600

[icedteagirl]

Is this right? My Virginia state return says to add the amount of dependent care expenses, which for us was over $8000. I add this into the state return, but when checking the return, I get an error saying that the amount can't be larger than the amount on the federal return. I put this same amount, $8000, into the federal return, but after that, the federal return shows that I only get the 600$ credit. So then if I put 600 into the state return instead of the full amount of 8000, then I don't get any errors. Am I supposed to just put the credit amount of 600 into the state return? Just want to make sure because there's a big difference in the tax refund and want to make sure I do this right. Thank you! 

[ColeenD3 · Accepted solution]

Child and Dependent Care Expenses -

You may claim this deduction on your Virginia return only if you were eligible to claim a credit for child and dependent care expenses on your federal return. Enter the amount on which the federal credit for child and dependent care is based. This is the amount on federal Form 2441 that is multiplied by the decimal amount - up to $3,000 for one dependent and $6,000 for two or more. DO NOT ENTER THE FEDERAL CREDIT AMOUNT.

VA Child Care Credit

[icedteagirl]

Exactly what I needed. Thank you! 

[cairo_jennings]

I'm doing this on my 2022 Virginia return: MFJ, qualify for federal child care tax credit for 2 dependents, inputting 6000 for both the fed and Virginia.  Turbotax won't let me submit - error code 101.  Thoughts?

[DawnC]

From the VA instructions for the credit: 

101 - Child and Dependent Care Expenses - You may claim this deduction on your Virginia return if you entered expenses to claim a credit for child and dependent care expenses on your federal return.  Enter the amount on which the federal credit for child and dependent care is based.  This is the amount on federal Form 2441 that is multiplied by the decimal amount - up to $3,000 for one dependent and $6,000 for two or more. DO NOT ENTER THE FEDERAL CREDIT AMOUNT.    The amount will be on Line 3 of Form 2441.   As long as you and your spouse (if applicable) had earned income reported, the amount will be on Line 6 as well.

If the amount on Line 3 of Form 2441 is not $6000, go back through the Child and Dependent Care Credit (instructions in link) in TurboTax and make sure you have entered all of the necessary information.   Also, make sure there is earned income enter for both you and your spouse as that is one of the requirements for the federal credit.   You may qualify for the VA deduction even if you did not qualify for the federal credit.

[Edited 02/08/2023 | 3:56 PM PST] @cairo_jennings 

[JonH87]

I am having this same issue with my 2022 taxes, however I believe I should be able to claim the Virginia deduction even though we did not qualify for the federal credit. According to tax.virginia.gov webpage on Other Deductions: Child and Dependent Care Expenses: "You can claim the Virginia deduction even if you weren’t able to claim the federal credit." I could not find any official source from Virginia that says otherwise. Am I correct in my interpretation? If so, how can we claim this valid Virginia deduction even though we did not qualify for the federal credit using TurboTax? 

[JonH87]

This does not appear to be correct. The 760 2022 instructions do not include this statement you quoted: "You may claim this deduction on your Virginia return only if you were eligible to claim a credit for child and dependent care expenses on your federal return." What is the basis for this guidance that the Virginia deduction can only be claimed if a taxpayer qualified for the federal credit? I cannot find any official/actual source for it.

[DawnC]

The instructions say (Page 23)   ''101 Child and Dependent Care Expenses - Enter the amount on which the federal credit for child and dependent care is based.   This is the amount on federal Form 2441 that is multiplied by the decimal amount - up to $3,000 for one dependent and $6,000 for two or more. DO NOT ENTER THE FEDERAL CREDIT AMOUNT''.     

@JonH87  You can claim the VA deduction even if you were unable to claim the federal credit, but the amount of the deduction is the amount of dependent care expenses claimed on your federal return (up to $3K or $6K).   Enter the amount of expenses claimed on the federal return.   Your federal credit may have been zero, but you can still enter the amount of expenses used to calculate the credit in order to take the VA deduction.  

Child and Dependent Care Expenses

You may qualify to claim this deduction if: 

• You were eligible to claim a credit for child and dependent care expenses on your federal income tax return.
• You can claim the Virginia deduction even if you weren’t able to claim the federal credit.