I contributed $5000 in 2022 to a Dependent Care FSA through my employer. My childcare expenses in 2022 were approximately $30k for two children. My understanding is that because my childcare expenses exceed $5000 that I can also claim a portion of the Child Care Tax Credit ($6000 Child Care Max Credit - $5000 FSA = $1000). As I fall in the top bracket my credit should be $1000*0.2= $200.
I have observed that when I enter my childcare expenses in TurboTax for my first child that my federal refund goes up by $1200. Then when I enter my second child my federal refund goes up another $200 ($1400 total). When I look at Form 2441 in TurboTax everything appears to be entered correctly and the correct $200 credit is calculated. I do not know where the extra $1200 credit is coming from. It would appear that TurboTax is giving me the full Child Care Tax Credit when I enter child 1 ($6000 * 0.2 bracket = $1200) plus the correct $200 credit when I enter child 2.
Am I entering something incorrectly or is TurboTax potentially double calculating the Child Care credit?
