Child and Dependent Care Credit Decreased from $1200 to $200. Why?

[kdw133]

We have 3 kids, over $6,000 in yearly child care costs, and income over $43,000.

In 2018 we filed using TurboTax.   It generated a Form 2441 and Schedule 3 that gave us a full $1200 child and dependent care credit.

For 2019, it is only showing a $200 credit, even though our situation has changed very little.

My understanding is it is a 20% credit of up to $6000 in care costs for 2+ children.  That should be $1200 like last year.  Why is it only showing $200 for this year?

I posted this prior and the first response suggested it was because our total tax was $0.  I mistakenly thought that was correct and marked it as best answer, but we do have a total tax of $1700.   Reposting for more ideas.  Thanks.

[kdw133]

In 2018 we filed using TurboTax.   It generated a Form 2441 and Schedule 3 that gave us a full $1200 child and dependent care credit.

For 2019, it is only showing a $200 credit, even though our situation has changed very little.

My understanding is it is a 20% credit of up to $6000 in care costs for 2+ children.  That should be $1200 like last year.  Why is it only showing $200 for this year?

I posted this prior and the first response suggested it was because our total tax was $0.  I mistakenly thought that was correct and marked it as best answer, but we do have a total tax of $1700.   Reposting for more ideas.  Thanks.

[AnnetteB6]

Some possible things to consider:

1 -- double check your entries to be sure that the total child care costs have been divided among three children and not claimed on just one child

2 -- did you have a Flexible Spending Account (FSA)that covered some of the expenses for 2019?  Check your W-2 Box 10.

3 -- are your children under the age of 13?

@kdw133

[kdw133]

Annette,

Thanks for the response and the list of things to check.  I do have the child care costs split among the 3 children, we have a flex spending account for dependent care, and all are under the age of 13.

The FSA does appear to have some effect here.  For 2019, I think it's handling it correctly.  Max $6000 for childcare, -$5000 in FSA, so credit only available for $1000 left.  20% x $1000 = $200.

After doing some more research, it appears my 2018 taxes may have been incorrect.  Last year we had the same $5000 in FSA but TurboTax allowed 20% x $6000 for another $1200 credit on top of the FSA.  It is unclear why it was handled that way last year and I don't know if that should have been allowed.