Child and Dependent Care Credit Filing Problem

[Yochanite]

We are filing "Married Filing Jointly" and both of us work and have earned income. However, whenever I tried to enter information for "Child and Dependent Care Credit" on Turbotax (Home & Business, Mac), then I got faced with the question if either of us "was a full-time student" or "was disabled" and whenever I selected "none of the above" for both of us then we got back to the main menu. As far as I understand, if both of us have earned income (I already entered both of our W-2), then this question should not even pop up.

When I tried to search for form 2441 to enter manually, then while TurboTax allows me to enter the information about the care provider, it refuses to let me type in information for my child (name and expense for her).

Could someone help me with how to successfully get TurboTax to handle "Child and Dependent Care Credit" for me? Thanks.

[CatinaT1]

Go back and review your w2 entries and make sure you have them correctly entered as TP W2 and Spouse W2.  I suspect you have both W2's assigned to one of you so the program thinks one spouse didn't have income.

[Yochanite]

Thanks Catina. I checked and the two W-2 that I put in are listed under two different names (one for my wife and one for me). The only difference is that I used different approaches to enter them: for my W-2 I was able to import it automatically but for my wife I couldn't so had to enter it manually.

Therefore, if I click on the "Edit" button for my entry then the first line says "Enter (My Name)'s W-2" and the first item is "This W-2 belongs to" with the two checkboxes for "My Name" and "My Spouse Name" as the two options to choose from.

However, if I click on the "Edit" button for my wife's entry then while the first line says "Enter (My Spouse Name)'s W-2" there is NO "This W-2 belongs to" item.

Is this somehow related to the "Child and Dependent Care Credit" problem that I mentioned? Also, my wife works for school district since I saw a question about if the "employer is state or local government" when entered her W-2. Not sure if that's related but I just want to mention just in case.

Thanks.

[AmyC]

You may want to delete both w2 forms and enter them again to be sure you have each assigned to the correct spouse. Once the assignment is correct, the child care will calculate.

[Yochanite]

Hi Amy,

I have deleted both W-2 and entered them manually again, and still the problem persists. Is there any constraint/qualification on the income for each of us to quality for this credit? Thanks.

[DawnC]

No, there is no income limitations.  But do you have your dependent listed correctly?    You have to have a birthday entered that reflects the eligible age and the child should show up as a dependent on Form 1040.   Not an ''Other Dependent'' but a qualifying child dependent, see below.  

There are several other tests you must meet to claim the credit:

• You (and your spouse, if you're married) must have "earned income," meaning money earned from a job. Non-work income, such as investment profits, doesn't count.
• You must have paid for the care so that you could work or look for work. Being a full-time student or a parent unable to care for themselves does count as "working" for the purposes of the credit, even if you don’t receive any income for it.
• If you are married, you must file a joint tax return.
• You must provide the name, address and Taxpayer Identification Number (TIN) of the person who provided the care. The taxpayer ID number is either a Social Security number (SSN) or an Employer Identification Number (EIN). Ask your care provider for the number.

For the purposes of the Child and Dependent Care Credit, a "Qualifying Person" is defined as one of the following:

• A child that was age 12 (or younger) for at least part of 2020 and who is also claimed as a dependent on your return. If the child turns 13 during the year, the child will qualify for the part of the year that they were under age 13
  • Exception: See special rules for divorced or separated parents, below
• Your spouse, if they're unable to care for themselves and lived in your home for at least 6 months during 2020
• Anybody who lived in your home for at least 6 months during 2020 and was unable to care for themselves, if they:
  • Are claimed as a dependent on your return, or
  • Could have been claimed as your dependent but weren't because their gross income was $4,300 or more, they filed a joint return, or you (or your jointly-filing spouse) could be claimed as a dependent on somebody else's 2020 return

TurboTax will figure out if the person(s) for whom you provided care meet these requirements.

The Ins and Outs of the Child and Dependent Care Tax Credit

[Yochanite]

Thanks, Dawn. I believe that I have my kids listed correctly. One of my kids is not 12 year old yet so I think she should qualify. In the "Personal Info" section all of my kids are listed as "Dependent" by TurboTax. Both of us work for different companies and we both have W-2 from those companies. And I double check the "Personal Info" section and our filling status is "Married filing jointly".

I would like to get to the step of putting in the information for the caregiver but so far TurboTax doesn't allow me to do that, whenever I click on the "Update" button on the "Child and Dependent Care Credit" item it first ask the question "Did you pay for child and dependent care in 2020?" and when I answer "Yes" it go to the "Tell Us More About XXX and YYY" with checkboxes for if we are "full-time student" or "disabled" or "none of the above" (I chose "None of the Above" and it immediately goes back to the main menu). As far as I understand, that question about "full-time student" and "disabled" should not even pop up with both of us have earned income as indicated by entering two different W-2 separately for two of us).

I even tried to go to the "Forms" menu, search for the 2441 form and tried entering information manually but as I described in previous message TurboTax doesn't let me enter information related to my kid in that 2441 form directly.

PS: I have always used TurboTax desktop (different versions) for more than 10 years to file my tax but this is the first time that there is a problem that is this hard to figure out what I did wrong. Is it possible that TurboTax Home & Business 2020 has a bug related to this particular item?

[DawnC · Accepted solution]

It sounds like the earned income from the W-2s still may not be showing correctly.   When you go into Forms Mode and review the Wages, Etc. Wks (that is how it is titled in the list of forms )worksheet, does it show information on Line 1 for both of you?   

There is also a worksheet titled Earned Inc. Wks that you can look at to verify both you and your spouse and showing earned income.    Part ll refences the Child and Dependent Care credit details.  

And even though I am sure it has been mentioned, make sure the kids' birthdays are correct.   Everyone's social entered?  

[Yochanite]

Thanks Dawn. I checked the "Wages, Salaries, & Tips Worksheet" and things look good, both cells on Line 1 that you pointed out are filled out correctly.

The Earned Inc. Wks that you mentioned is the one that gave me the answer. Turned out that my wife has "self-employment income" for her personal business and that one has loss last year that cancelled out her W-2 income and thus she doesn't quality anymore.

Thanks a lot for your help, everyone!

[DawnC]

Yep - that will do it.   From Pub 503 ---

Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. A net loss from self-employment reduces earned income. Earned income also includes strike benefits and any disability pay you report as wages.

Generally, only taxable compensation is included. For example, foreign earned income you exclude from income isn't included. However, you can elect to include nontaxable combat pay in earned income. If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. (In other words, if one of you makes the election, the other one can also make it but doesn't have to.) Including this income will give you a larger credit only if your (or your spouse's) other earned income is less than the amount entered on line 3 of Form 2441. You should figure your credit both ways and make the election if it gives you a greater tax benefit.