Child and Dependent Care Credit not appearing correct

[djy9m]

I seem to be having an issue with Child and Dependent Care Credit. I believe I qualify based on all of the requirements I've read (and re-read several time)

• My wife and I both work, wages are included properly.
• We earn under 400k together.
• We spent around 14k on infant daycare in 2021. Dependent details entered properly (he is 1 year old). 
• We got 10500 in daycare FSA and Turbotax tells me is that I we could get the credit if our expenses are over 10500, which they are.
• In the "Here's what you spend on providers" section, Provider, EIN, and Amount paid are showing correctly.
• In the summary for Child and Dependent Care Credit, Turbotax says my eligible expenses are only 10500 (I think this is the problem), rather than the 14k I entered, and then it subtracts the 10500 of daycare FSA benefits reported on W2. This ends with $0 credit.

Any ideas why my eligible expenses are showing 10500 rather than 14k I entered? 

Any other reasons this isn't showing up, or reason I wouldn't qualify?

[DawnC · Accepted solution]

The credit is worth as much as 50% of your qualified expenses, up to $8,000, (for one qualifying person), and $16,000 (for two or more qualifying persons). Your percentage depends on your AGI, with the higher percentages applying to lower incomes and vice-versa.

As an example, a married couple supporting two qualifying persons who paid $16,000 in qualified expenses may qualify for up to $8,000 in credits, depending on their AGI.

Since you received more than the maximum credit through your FSA, there is no dependent care credit left to take.    If your FSA had been only $5000, you would have been able to apply $3000 of expenses to the dependent care credit.   The $10,500 from the FSA is tax free already so you can't take additional credit for those expenses.   The max for one dependent is $8k. 

What is the Child and Dependent Care Credit?   

[djy9m]

That's interesting. I was thinking the credit would apply to the amount I was not able to get tax-free. I see now why others have stated the complexity of this credit when planning due to the overlap with the dependent care FSA.

Turbotax may want to look at their message in the "Here's what we have so far" screen for the Dependent Care credit. I found this line confusing, making it seem like expenses over 10500 would be eligible for the credit.

"You have 10500 of employer-provided care benefits. In order to receive this credit, your expenses below must be greater than this amount."

Thank you for your help! Very informative!