Why is Turbo Tax saying "Because you entered $6,000 or less of earned income for both (me and my spouse), we need to know if either of you were a full time student or disabled, in order to calculate the maximum credit? Our income is much higher than that, and we both earned. As it is, I answered no to both questions (not students, not disabled). The credit calculating is over $600 less than was calculated last year. What is happening?
NOTE:
It appears that this may be a display issue only with the desktop product.
That is, you see the following screen with its error message:
However, you should try to click "None of the Above" for both spouses (if true) and just continue. It appears that the subsequent calculations are correct.
Please try this and check the results.
The definition of earned income in IRS Publication 972 includes Taxable earned income and nontaxable combat pay. Calculate your earned income (not total income) and compare that to the $6,000 amount reported by TurboTax. For most people, earned income is from their W-2 job or their self-employment income.
Thanks, I've looked at our income as recorded in Turbo Tax and I think there is a software issue in regards to this topic - based on other topics I found searching in this community area. Do you know how/when I can find out if TurboTax software will be updated/corrected? Is there any work-around? What is happening (I think) is that it is not registering my and my spouse's income correctly in the Child Care and Dependent Credit area, despite it showing accurate numbers for each of us in the Income area.
Your earned income is tabulated on an "Earned Inc Wks" form, and the Form 2441 for your Child and Dependent Care Credit picks up the earned income from there.
If after you sign out and sign back in you still have the issue, you could try to delete the Form 2441 from your return, and see if picks up the correct earned income when you re-enter your Child and Dependent Care information. If it does not, you could try the same thing with the Earned Inc Wks.
Here's how to Delete a Form in TurboTax Online:
Click here for the full article on deleting a form in TurboTax.
If you are using the TurboTax Download/CD version, you click "Forms" (top right) and once in Forms mode you find the forms in the list in the left pane, and delete them. Of course, if you are using TurboTax Download/CD, you can take a look at the forms before you delete them, and may be able to resolve the issue.
I had the same problem. But it's not just the credit that's missing, but if you made any pretax child care contributions, Turbo Tax will ADD that to your income and you WILL BE TAXED on that contribution. Major software issue that many people may not notice. I was able to workaround this issue by doing the following:
1. On the same screen that give you that message about the $6000, instead of checking "none of the above" for both, check "disabled" for you spouse.
2. On the next screen, choose for all twelve months.
3. Continue with next screen to choose "no" to working while disabled.
4. Now go hit the back button a couple of times to get back to the first screen and choose "none of the above" for both. (the bogus message of $6000 is still there)
5. Now start entering the data for each child, one at a time.
I spent well over an hour with Turbo Tax on this issue. They saw the problem but at first thought I entered something wrong. Not the case. We went through the process multiple times, sharing screens. Then, since nothing they suggested worked, I tried this "disabled" trick out of desperation and it worked. They saw it work too so I would think a software fix is on the way.
it's a known bug....hopefully gets fixed with the next update.
This is our issue as well. We have carefully checked, removed and re-entered W-2 information for both of us. Showing over 6K for each parent yet the download is saying we do not have over 6K in earned income and asking whether we were disabled/student in order to proceed with childcare credit. We are waiting on a fix from TurboTax. With this many people commenting I would have expected a fix by now or instructions from one of the Experts acknowledging issue and timeline for fix. Very frustrating!
I'm going to need your help to get more information. Please send me a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:
***Online Product***
***Desktop Product***
NOTE:
It appears that this may be a display issue only with the desktop product.
That is, you see the following screen with its error message:
However, you should try to click "None of the Above" for both spouses (if true) and just continue. It appears that the subsequent calculations are correct.
Please try this and check the results.
YES! That helped. The wording is what's confusing and your instructions and screenshot helped me. Thank you so much! I've spent hours on the phone with agents getting no where.
It is more than a display problem in my case. Turbo tax never presented a screen where I could enter how much was spent, so no credit was calculated. Worse yet, the $5000 I paid in pretax contribution at my employer was ADDED to my earned income, and TT calculated that I owed tax on that amount. That was confusing because it was entered correctly on the W2. I wonder how many people already filed and didn't catch this. Anyway, the steps I took (earlier post) proved to be a successful workaround. The earned income is now $5000 less and I have a child care credit.
it is more than a display issue; I was able to replicate the bug in the Desktop version
I have the same issue. After I enter the expense, TT shows the amount as $0.
Anyone got any updates from TT on this?
Trying to narrow down the issue a bit. What version of TurboTax are in? Did you try the workaround stated by rBrian780 above. It has shown to work.
The thread is talking about two separate issues: a display issue which has been identified and the fix for which is schedule to be rolled out this week and a second issue about not being able to enter expenses.
Is the second issue the one that you were able to duplicate? If not, would you describe the situation?
If this is the issue, I'm going to need your help to get more information. Please send me a diagnostic file which is a copy of your tax return that has all of your personal information removed. Since this is probably one of your tests, that may not be a big problem, still, it's what we are used to.
You can send one to us by following the directions below:
***Online Product***
***Desktop Product***
Diagnostic file: 613291
Support call # : [social security number removed] (not very helpful - spent significant amount of time on hold and did a screen sharing session with tech support. They had me walk me through everything I entered starting from my Wages... before I could even explain the issue fully). The TT ads are misleading - forget the common guy, even TT support can't figure this out... 🙂
Yes, two issues, related or unrelated.
I am using TT premier, Windows desktop edition.
I have both issues:
- The earned income showing less than $6000 even though it is much higher
- The entered expenses showing $0 even after entering a value two screens later
The workarounds described in the thread did not work for me.
Thank you. I appreciate your effort.
On the screen with the heading "Here's what we have so far", there is the message "You have $XXX in employer-provided care benefits. In order to receive this credit, your expenses below must be more than this amount."
Look at the sum of the Box 10 entries on two of your three W-2s. You will see that the expenses you entered did not exceed this amount, therefore, your expenses were reduced to zero, because none of them were eligible for this credit.
Why? Because you can't take a credit on amounts paid for with tax-advantaged dollars. You already got a tax benefit because the amounts in box 10 were removed from Wages in box 1 on your W-2s. Therefore, until you spend more money on child and dependent care than you had in your FSA (this is what Box 10 is referring to, a Dependent Care FSA), there is no chance of getting the credit.
Hence the expenses were zeroed out.
As for the display issue, where it incorrectly says that you have less than $6,000 in earned income, that is indeed just a display issue, and if you ignore it and continue on, the calculations will be correct.
And as I think I noted above, this display issue is scheduled to be updated later this week.
Maybe and partially true....
Here's your test cases:
- Let's say my contribution was $3733
- If I input $3500 as expense, it takes it and shows it
- If I input $1500 as expense, it does not...
- Also if I have multiple kids and want to enter multiple values, each below $3733, it does not show each of the values.... and what happens if cumulatively I pass the $3733 I contributed tax free to the FSA?
And finally, this screen is showing the expense as entered, not the value which is eligible for credit. If you check the relevant form, this is what the the form should also have I believe - the expense incurred. The fact that if its below then you don't get a credit is a calculation that comes later.
Let me know how your testing goes.
The credit is available for children 12 and under. If you have 2 children that are 12 or younger on Dec 31, 2019, you can receive a $6K credit. If you only have 1 child that is 12 or under, your credit will max out at $3K. With only 1 eligible child, and more than $3K in box 10, you won't be eligible for any Dependent Care credit and the amount over $3K that you received tax-free will be added back into your income. If you have expenses that can be applied to either child, apply them to the youngest child to reduce your taxable income.
If you are using the desktop software, use Forms Mode (click on Forms in the upper right corner) to view the Wages, etc. Wks, specifically Line 11 of that worksheet. The amount on LIne 11 represents the taxable portion of your dependent care benefits that show in Box 10 of your W-2(s). From this worksheet, you can see the interaction between your Box 10 contributions, your child care expenses, and Form 2441 (Dependent Care Credit).
When you enter your W-2, the entire amount(s) in Box 10 will show as taxable until you enter expenses for eligible children. When you enter your expenses, the taxable portion of these benefits goes down. Once your expenses (for the eligible child)(ren)) surpass the amounts in Box 10, Line 11 of the worksheet drops to zero and the Dependent Care Credit Form 2441 is generated.
In your example of $3733 in Box 10 contributions, you have to have 2 eligible children to receive any credit. If you do and your eligible expenses are $3500, you would see $233 on Line 11 of the worksheet, meaning $233 of your tax-free benefits are actually taxable and no dependent care credit would be given. If you had $5K of eligible expenses, Line 11 would be blank since none of it would be taxable and you would get an additional tax credit on Form 2441 of $1267.
If you have only 1 eligible child and $3733 of FSA contributions, the maximum expenses you can claim is $3K, which would still leave $733 on Line 11 as taxable and no dependent care credit. With expenses of $1500 (your example) for the eligible child, you would see $2233 of your contributions added back into your taxable income on Line 11 of the worksheet and no additional credit on Form 2441.
I know the screens do not display correctly, but you should be able to look at the worksheet and verify that your amounts are properly being applied. You can also see the total amount of expenses applied for each child on the Dependent Wks Part lll (Dependent Care Expenses). You will only see amounts for the child(ren) that was 12 or younger. @josef104