Dependent Care Credit

[IshouldhavehiredCPA]

-My wife and I are both earning income

-We are married filing jointly

-We claimed our dependent

-We make <$400,000

$5497 combined contribution into work dependent care accounts.

I enter into into Turbotax Dependent Care Credit section, it reduces tax liability by ~$1300 and at the end says we don't qualify but maintains to reduced tax liability.

Is this an error? Please and Thank you

[MaryK4 · Accepted solution]

If you have Dependent Care benefits from your employer (W2 Box 10), it is taxable income until you enter the Dependent Care Expenses in the Deductions & Credits section.  That is the reduction in tax liability.  You do not qualify for the Dependent Care Credit because you are disqualified due to income and employer-provided benefits.  

So you are getting the employer provided benefits tax-free but do not qualify for the Dependent Care Credit.

[Bsch4477]

Child care credit maximum expense is $3,000. If you spent more than that from your FSA you have already exceeded that maximum.