Married Filing Jointly, paid a daycare for our two kids.
Going through the steps for the Dependent Care Credit. We paid $19,727 in 2021, roughly similar to what we paid in 2020. My wife has the $5000 pre-tax deducted from her paycheck. Now TurboTax is showing only a $200 credit for 2020, but this year it's coming in as $4,950 for 2021. Am I doing something wrong, or did the taxes change drastically between the two years?
No, you're probably not doing anything wrong.
For additional information, see What is the Expanded Child and Dependent Care Credit?
No, you're probably not doing anything wrong.
For additional information, see What is the Expanded Child and Dependent Care Credit?
Congress boosted the credit for 2021. For one child, the maximum eligible expense is $8000 and $16,000 for two or more children, so after the $5000 FSA is accounted for, there is a further $3000 or $11,000 eligible for the credit. The credit percentage was also boosted from 20% to as much as 50%, depending on your income.
The credit goes back to normal for 2022, unless Congress changes the law again.