Child Care Credit - Worked Two Months

[Tina20222]

I stayed home to take care of my kid from January - August 2024. In September, I decided to go out to work. I sent my kid to a daycare. She was in the daycare two days a week, that allowed me to do my job searching. I got a full time job and started working at the beginning of November.  My kid stayed in the daycare through out 2024. We paid about $4,000 for the tuition. Because I only worked two months in 2024, my W2 is only $3,600. Turbo tax says I couldn't apply for child care credit. My spouse works full time. My spouse's 2024 W2 is $85K.

My question is: though I didn't earn $6,000+ in 2024, the four  month tuition of $4,000 we paid are for the period that I looked for job and worked. Can we apply child care credit? I have the statements from the daycare that show the amount and period of the tuitions. 

[rjs]

You should be able to claim the child care credit. Did you enter both your W-2 and your spouse's W-2? You both have to have income in order to claim the credit. Go back to the summary of your W-2s and make sure each W-2 is entered for the correct person. When you enter a W-2 on a joint return you have to specify whose W-2 it is. If you mistakenly entered both W-2s for the same person, then it looks like the other person had no income.

You do not have to earn $6,000 in order to claim the credit, but you will only be able to get credit for $3,600 of expenses because the amount of expenses you can use for the credit is limited to the earned income of whichever person had the lower income. Enter the full amount that you paid to the daycare. TurboTax will calculate the limit on the expenses.

[Tina20222]

Hi rjs, 

Thank you for the response. I entered both W2 for the correct person. The below are the screenshots. Thank you.

[rjs]

Does either of you have an amount for dependent care benefits in box 10 of your W-2? The dependent care benefits reduce or eliminate the amount of expenses that you can use for the dependent care credit.

If you don't have anything in W-2 box 10, there does seem to be a bit of a bug here, but it's easily bypassed. On the screen that says you don't qualify for the credit, ignore what it says and click Continue. The next screen will ask whose care you paid for. Select your child's name and proceed through the screens, entering all of the child care expense information. At the end it will give you the credit.

I don't know what conditions cause this error, but it must be uncommon because I have not seen other complaints about it. In fact, I got the same error in a test tax return, but I did not get it in a actual return that has child care expenses.