Child and Dependent Care Credit conditions

[yduane]

The software says that both parents must work in order to be qualified for this credit, why? My situation last year was that my wife was working, I got laid off in 2023, was looking for a job, preparing for interview, attending interview, or working on projects as part of the interview process, and why our spending on child care is not qualified?

Turbotax tells me that we are not qualified, yet keeps asking to review it because it thinks there is a problem.

[xmasbaby0 · Accepted solution]

Sorry----the "catch"  to getting the childcare credit while searching for a job is that you have to actually find a job and begin working at the job in order to get the credit.   That is not TurboTax---that is the way Congress wrote the tax law.   So with a joint return, if neither parent is a student or disabled, you have to be able to show income from both spouses in order to get the child care credit.

https://www.irs.gov/help/ita/am-i-eligible-to-claim-the-child-and-dependent-care-credit

[SabrinaD2 · Accepted solution]

To qualify for the Child and Dependent Care Credit, you generally need to have earned income. Earned income includes wages, salaries, tips, and other taxable employee compensation, as well as net earnings from self-employment

However, there are exceptions. If you or your spouse were full-time students or disabled, you can still qualify for the credit even without earned income

In your case, since you were laid off and actively looking for work, you might not meet the earned income requirement unless you had some form of taxable compensation during that period.

Here are some steps you can take to help ensure  TurboTax stops asking you to review.

1. Log into TurboTax
2. Review your income entries: under the Income Tab in TurboTax. Help ensure all sources of earned income are correctly entered.
3. On the Did you pay for child and dependent care? screen, select Yes, answer the questions on the next screen, and continue.
4. Review the "Tell Us More About Barbara and Your Spouse" screen: When you reach this section, make sure to select the appropriate options for both you and your spouse. If either of you is a full-time student or disabled, this should be indicated.