Child Care Tax Credit

[BillM223]

@NCperson

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***

1. Sign into your online account.
2. Locate the Tax Tools on the left hand side of the screen.
3. A Drop down will appear. Click on Share my file with agent.
4. This will generate a message that a diagnostic copy will be created. Click on OK, the tax file gets sanitized and transmitted to us.
5. Please provide the Token Number that was generated onto a response to this thread.

***Desktop Product***

1. Click into your return.
2. Click Online and select "Send Tax File to Agent".
3. This will generate a message that a diagnostic copy will be created. Click on OK, the tax file gets sanitized and transmitted to us.
4. Please provide the Token Number that was generated onto a response to this thread.

[josef104]

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.

[BillM223]

@josef104

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.

[josef104]

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.

[DawnC]

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 

@jgualan   @4brian780   @CKJDuty