Does not being able to include “2022 Expenses you prepaid in 2021” for child dependent care mean that I lose out on paying upfront?

[Iseewhatshappeninghere]

My child’s preschool runs from Sep 2021 – June 2022. It had three payment options.

Pay monthly from July – Apr; OR
Pay once in July and then once in Dec; OR
Pay all upfront in July

Now that I am completing my taxes and I am entering the $ amount for my child in the 'child and dependent care section', I see a note that says “Do not include: 2022 Expenses you prepaid in 2021” and “Do not include: Expenses incurred in 2020”.

These two statements to me mean that you can only claim the credit for the money you paid in 2021 for 2021. So it seems that in 2021, I can only claim a credit for Sep 2021 – Dec 2021. But the reason I am posting this is because it seems that when I pay in 2021, for 2022, I will completely lose out on being able to claim that in the credit, even in the 2022 tax year. And all 3 payment options have payments in 2021 for 2022 (in the first option I lose out on 2 months May-Jun, in the second and third option, I lose out on 6 months Jan-Dec). This doesn’t seem right. Can someone help figure out how to claim this? Seems like I will have to tell my school that for the coming school year this fall, they should change their payment structure to allow for me to be able to take the credit, which they obviously will not do.

Thank you!

[LenaH · Accepted solution]

Per the IRS, if you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. Claim the expenses for the later year as if they were actually paid in that later year. Therefore, you should be able to count the amounts prepaid for 2022 on next year's tax return. 

Publication 503