daycare expenses
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bellamkondaravi
Level 2

daycare expenses

I got two kids and I have paid $12000 as daycare expenses for my first kid, Can I get credit for both kids even though i have paid for one kid. turbo tax showing $1200 as credit. Is it correct?

3 Replies
AlanT222
Expert Alumni

daycare expenses

Unfortunately, you cannot use the amount left over from the amount you paid for your first child towards the second child. When you put in the expenses, you must provide the name, address and tax ID number for the childcare provider.  You will not have this information for the second child.  

The credit is worth anywhere from 20% to 35% of your qualified expenses, up to $3,000 (for one qualifying person). Your percentage depends on your AGI, with the higher percentages applying to lower incomes and vice-versa.

TurboTax will determine your eligibility and calculate the maximum credit allowed.

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bellamkondaravi
Level 2

daycare expenses

I'm confused... but why turbo tax is showing 20% credit automatically for my second kid...

Opus 17
Level 15

daycare expenses


@AlanT222 wrote:

Unfortunately, you cannot use the amount left over from the amount you paid for your first child towards the second child. When you put in the expenses, you must provide the name, address and tax ID number for the childcare provider.  You will not have this information for the second child.  

I believe you will find this is incorrect.  While Congress' intent might have been to allow credit for $3000 of expenses per qualifying child, that's not how the forms and laws are actually written.

 

Form 2441 asks first for the name of the provider.  You only need to enter 1 provider.  Then it asks for the names of qualifying children and the amount spent for care for each child.  The definition of qualifying child does not include the requirement that you actually paid for care for that specific child, only that the child exists and meets the age, residency and relationship requirements.  So if you list two children with care expense for child #1 of $6,000 or more, and expenses for child #2 of $zero, the form will still show $6,000 of qualifying expenses for a credit of between $1200 and $2100, depending on overall income. 

 

Edited to add:

 

In fact, the form 2441 instructions specifically address this:

 

To qualify for the credit, you must have one or more qualifying persons. You should show the expenses for each child in column (c) of line 2. However, it is possible a qualifying child could have no expenses and a second child could have expenses exceeding $3,000. You should list -0- for the one child and the actual amount for the second child. The $6,000 limit would still be used to compute your credit unless you have already excluded or deducted, in Part III, certain dependent care benefits paid to you (or on your behalf) by your employer.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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