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2024 Wisconsin Additional Child and Dependent Care Credit is not calculating correctly

They way Turbotax is calculating my Wisconsin Additional Dependent Care Credit for 2024 is wrong.  Your software is not adding a tax credit to my state return like it should because I have a dependent care FSA.

 

I have one child with a total of $10k qualified expenses and a dependent care FSA benefit of $5k.  You correctly calculate my federal credit at $0 because the FSA amount exceeds the federal limit of $3k.

 

However, the statute for Wisconsin in 2024 changed to allow expenses up to $10k for a single dependent.  Turbotax is not recalculating my WI-2441 correctly and saying I also get $0 credit from the state which is plainly wrong.  My state additional credit is actually $1000 (20% of the remaining $5k of qualified expenses after you account for the higher limits).

 

The mistake is easy to prove.  If I change Box 10 on my W-2 to be $2995 for my FSA, Turbotax shows I get a $1 credit on the federal return and then you correctly calculate my Additional Wisconsin credit with the higher limits in 2024.   But if I now change Box 10 to be $3000, the Wisconsin credit is completely removed.   Having a $0 federal credit is causing you to not calculate the Wisconsin additional amount correctly.

 

Not impressed.

 

 

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11 Replies
KeshaH
Employee Tax Expert

2024 Wisconsin Additional Child and Dependent Care Credit is not calculating correctly

If you'd like, we can look at your return and see exactly what you see to  help come to a resolution. The return will be scrubbed and won't include any of your personal details.

 

If you're using TurboTax Online:

Once you're logged in to your account,

- on the left hand panel, click on Tax Tools and then choose Tools

- on the pop up window, select Share my file with Agent

- you'll see a message saying you'll give us a copy of your tax return. Your personal information will be changed so we can't see any private information.

- click okay and you'll get another message with a token

 

If you're using TurboTax Desktop:

  • Click on Online in the top menu of TurboTax Desktop for Windows
  • Select 'Send Tax File to Agent'
  • Write down or send an image of your token number and state then place in this issue.
  • We can then review your exact scenario for a solution

 

Please reply to this message with your token so that we can further assist you. Let us know all the states, if any, are included on the return.

2024 Wisconsin Additional Child and Dependent Care Credit is not calculating correctly

1272753.

 

Wisconsin is the only state for the return.

KeshaH
Employee Tax Expert

2024 Wisconsin Additional Child and Dependent Care Credit is not calculating correctly

Thank you for providing your token.

 

I've looked over your return and also reviewed the instructions to the WI-2441. Per the instructions, Form WI-2441 is heavily dependent on federal Form 2441.

 

The reason your WI credit is calculating as zero is because your income is not flowing to the WI-2441 on lines 7 and 8. These lines come from the Federal Form 2441, Part II. 

 

You received tax-free dependent care benefits in excess of work related expenses of $3,000. As you mentioned, you would not qualify for the federal credit in this case. Because you don't qualify for the federal credit, Part II of your federal Form 2441 is blank.

 

The instructions to the WI Form WI-2441 (page 3) require that your earned income amounts be pulled from Part II of the Federal Form 2441. The TurboTax programming is written based on the instructions to the form. Since your Part II is blank, your income is not transferring to the WI form. Although the WI statute was updated to reflect higher work related expenses for the child care credit, your credit is being limited based on the function of the federal Form 2441 and the instructions to the WI-2441.

2024 Wisconsin Additional Child and Dependent Care Credit is not calculating correctly

Are you implying that Turbotax is doing the correct thing?  Because it is absolutely not.

 

If you read the Wisconsin statute change, it explicitly states to recalculate form 2441 using the higher limits:

 

71.07(9g)(b) 2. For taxable years beginning after December 31, 2023, and subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02, up to the amount of those taxes, an amount equal to 100 percent of the federal child and dependent care tax credit that the claimant may claim on his or her federal income tax return for the taxable year to which the claim under this subsection relates using the expense limitation under par. (c) 5. rather than the expense limitation under 26 USC 21 (c).

 

71.07 (9g) (c) 5. Notwithstanding 26 USC 21 (c), for taxable years beginning after December 31, 2023, the maximum allowable expenses to determine the amount of the credit under par. (b) 2. is $10,000 for one qualifying individual, as defined in 26 USC 21 (b), and $20,000 for 2 or more qualifying individuals, as defined in 26 USC 21 (b).
 
Part II of my federal Form 2441 would no longer be blank once your replace the $3k/$6k federal limits (Part II Line 3 and Part III Line 27) with the $10k/$20k limits as the Wisconsin statute instructs you to do.
 
It is incorrect to say that since I don't have Part II completed under the $3k/$6k limits, that you shouldn't re-evaluate what Part II would show once you change to the higher $10k/$20k expense limits allowed by my state.  The additional credits allowed by my state are not gated by whether I receive federal benefits at the lower $3k limit, the Wisconsin statute explicitly tells you change limits in 2441 and re-run it.
 
 
KeshaH
Employee Tax Expert

2024 Wisconsin Additional Child and Dependent Care Credit is not calculating correctly

TurboTax is completing the WI Form W1-2441 based on the state provided instructions to the form. The state will need to update the instructions to agree with the statute.

 

2024 Wisconsin Additional Child and Dependent Care Credit is not calculating correctly

The amounts TO BE ENTERED on lines 4 and 5. (i.e. the amounts that would be entered into those lines if the form was completed)

 

It does not say to blindly take the blank values from an incomplete Form 2441 and coalesce that blank/incomplete value into a zero.  That is nonsense.

 

The instructions for lines 7 and 8 are clear that my actual earned income should to be filled in.  My earned income is not zero. Turbotax should be following the instructions for lines 4 and 5 to get the correct earned income values.   "Flowing" a blank value from an incomplete form into $0 is lazy and wrong.

 

You have a software bug.  I will use different software that does not have this defect.  Sorry to all the Wisconsin parents who will miss out on a tax credit due to Turbotax.

   

 

 

BillM223
Employee Tax Expert

2024 Wisconsin Additional Child and Dependent Care Credit is not calculating correctly

barry_in_wi

 

Do you have the CD/download version of TurboTax (often called desktop)?

 

If so, I believe that I can give you a workaround.

 

On your federal 2441, on lines 4 and 5, do an override (right mouse click on the field to open the Override). Put your earned income on line 4 and your spouse's earned income on line 5 (or vice versa - we sanitize the return so well I can't easily tell which one of you is the primary taxpayer).

 

Once you do this, then the WI-2441 should populate lines 7 and 8, which will allow TurboTax to calculate the credit for Wisconsin.

 

Sadly, doing this override may cancel the Tax Accuracy Guarantee, but it's there if you want to try it.

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2024 Wisconsin Additional Child and Dependent Care Credit is not calculating correctly

Thanks for that suggestion, it does seem like it would work around the current problem.  I have only used the online version, so I'll have to decide if paying Intuit for flawed software is worth it.   

 

And I do appreciate the irony that a manual override to improve the accuracy of the software will remove its own accuracy guarantee.

 

Hopefully someone at Intuit reads this and discovers how the software mishandles this specific scenario when dependent care benefits make you ineligible for federal credits, but you are still eligible for state credits.  I tried calling support, but of course no one will talk to me unless I pay for live support first.

 

BillM223
Employee Tax Expert

2024 Wisconsin Additional Child and Dependent Care Credit is not calculating correctly

I appreciate your sense of humor about this.

 

I have reported this internally, so we don't have to wait for someone to notice this. But, of course, that's no guarantee of whether or not Development can get to it this tax season.

 

Having written tax software (for another company), I have an appreciation for the volume of work that developers have to do in a relatively short time. We can't make any prediction of when this might be addressed.

 

If you decide to get the CD/download product, come back and ask if you have any issues.

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2024 Wisconsin Additional Child and Dependent Care Credit is not calculating correctly

Is this issue planned to be fixed by the next tax season? If not I will not use turbo tax and hope other Wisconsin residents realize they are losing out on substantial tax credits (potentially thousands of dollars) by using turbo tax. 

2024 Wisconsin Additional Child and Dependent Care Credit is not calculating correctly

I went back in and it appears that this issue is now fixed in the online version.  My state refund is showing the correct dependent care credit amount after the FSA exclusion.

 

I appreciate that they fixed this before April.  Too bad for Intuit that I already filed with a different product that got it correct the first time.  You lost a 20 year customer. But keep buying those super bowl ads!

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