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ian232
Level 1

Dependent Care benefit added to taxable income

 

Hi everyone,

 

My $5000 in Dependent Care benefits (Box 10) are being added to my taxable income. I have reviewed the Dependent Care Credit section several times, and there is no space to enter the amount my wife and I paid for dependent care last year.  Help!

 

Thanks,

 

Ian

2 Best answer

Accepted Solutions
Critter-3
Level 15

Dependent Care benefit added to taxable income

Some errors can keep that section from populating in the deductions and credits section.     

 

CHILD AND DEPENDENT CARE CREDIT

One of the most common mistakes that messes up the childcare credit for people is listing all of the earned income under only one name on a joint return.  Make very sure that your incomes are listed under each of your names.  It’s pretty easy to check.  Go to the Income section, and click “update” on Wages and Salary.  That will take you to the W-2 Summary.  Do you see income listed under both of your names?

 

A few other things—the childcare credit is not a refund.  It can reduce your taxes owed.  

 

If you were self-employed, but showed a loss, you will not receive the credit.

 

The person receiving the care had to be 12 or under or qualified as mentally or physically disabled. To claim the childcare credit you need to be filing as Head of Household or Married Filing Jointly. (NOT married filing separately)

 

If your child was born in 2020 make sure you say the child lived with you all year. The credit is a percentage of your expenses based on your AGI (the higher the income, the lower the percentage)  You must provide the Social Security number for each child you are claiming, and the Social Security number or Tax ID for each care provider.  You can claim a maximum of $6000 in expenses for 2 or more dependents.

 

In the case of divorced or never-married parents—only the custodial parent can use the childcare credit.

View solution in original post

Opus 17
Level 15

Dependent Care benefit added to taxable income


@ian232 wrote:

 

Hi Critter,

 

Thanks for the reply, and you were correct: I had mistakenly listed all of our income under my name. While that fixed the issue of the $5000 dependent care fund being added to our taxable income, it increased what we owe on our federal taxes by hundreds of dollars. Any idea what would cause that?

 


If your combined income was more than $137,700 and Turbotax was told it all belonged to one person, that person would be entitled to a refund of excess social security withholding, since the maximum social security wage base is $137,700 per person.  If that income belongs to two people and neither is individually over the wage base, that refund would be removed. 

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

View solution in original post

3 Replies
Critter-3
Level 15

Dependent Care benefit added to taxable income

Some errors can keep that section from populating in the deductions and credits section.     

 

CHILD AND DEPENDENT CARE CREDIT

One of the most common mistakes that messes up the childcare credit for people is listing all of the earned income under only one name on a joint return.  Make very sure that your incomes are listed under each of your names.  It’s pretty easy to check.  Go to the Income section, and click “update” on Wages and Salary.  That will take you to the W-2 Summary.  Do you see income listed under both of your names?

 

A few other things—the childcare credit is not a refund.  It can reduce your taxes owed.  

 

If you were self-employed, but showed a loss, you will not receive the credit.

 

The person receiving the care had to be 12 or under or qualified as mentally or physically disabled. To claim the childcare credit you need to be filing as Head of Household or Married Filing Jointly. (NOT married filing separately)

 

If your child was born in 2020 make sure you say the child lived with you all year. The credit is a percentage of your expenses based on your AGI (the higher the income, the lower the percentage)  You must provide the Social Security number for each child you are claiming, and the Social Security number or Tax ID for each care provider.  You can claim a maximum of $6000 in expenses for 2 or more dependents.

 

In the case of divorced or never-married parents—only the custodial parent can use the childcare credit.

View solution in original post

ian232
Level 1

Dependent Care benefit added to taxable income

 

Hi Critter,

 

Thanks for the reply, and you were correct: I had mistakenly listed all of our income under my name. While that fixed the issue of the $5000 dependent care fund being added to our taxable income, it increased what we owe on our federal taxes by hundreds of dollars. Any idea what would cause that?

 

Opus 17
Level 15

Dependent Care benefit added to taxable income


@ian232 wrote:

 

Hi Critter,

 

Thanks for the reply, and you were correct: I had mistakenly listed all of our income under my name. While that fixed the issue of the $5000 dependent care fund being added to our taxable income, it increased what we owe on our federal taxes by hundreds of dollars. Any idea what would cause that?

 


If your combined income was more than $137,700 and Turbotax was told it all belonged to one person, that person would be entitled to a refund of excess social security withholding, since the maximum social security wage base is $137,700 per person.  If that income belongs to two people and neither is individually over the wage base, that refund would be removed. 

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

View solution in original post

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