Form 2441: Child and dependent care expenses

[psychoanalyst]

Hello, 

I want to confirm if TT ia treating my dependent care expenses appropriately and calculating the correct credit. 

Here is my exact situation:

• I have twins who went to daycare for about 2 months towards the end of 2022. The total daycare fee for 2022 was $4953. 

• My wife had a balance of $357 in her dependent care FSA account as of Dec 31, 2022. This reported as such in her W2. 

Here is my question: what is the correct amount in Line 2 column (d) (qualified expenses)? Should it total to $4953 or should it be $4953-$357=$4596? 

I am asking because I am fairly certain TT is NOT subtracting my FSA contribution, but other softwares like Cash App and FreetaxUSA are and now I am not clear on who is correct. 

Would much appreciate some inputs here. 

Than

[CatinaT1]

What is in box 10 of your Wife's W-2? This is the amount of Dependent Care Benefit you received for 2022. This amount needs to be reconciled as used for qualified Dependent Care expenses and is done on Form 2441.

You will enter into TurboTax the actual amount you paid for care in 2022, even if you paid some of the expense with your FSA. TurboTax will automatically reconcile any amounts paid with the amount of Dependent Care Benefit you received.

This link will tell you more: Child and Dependent Care Credit 

[psychoanalyst]

Box 10 in my wife's W2 reports the $357 I mentioned. 

I guess my point is since I can't see the final generated Form 2441 with TT, I am not sure how it is doing the reconciling....there is a clear discrepancy between TT and other softwares that I want to understand 

[CatinaT1]

Okay, if box 10 has $357 that is not the balance remaining on December 31.

You have two children, so you have up to $6000 of qualified expenses to use toward the Child and Dependent Care Credit. You had less than $6000, so you are good.

When you enter your daycare expense of $4953, this is what will happen-

• The $357 of Dependent Care Benefit, will be reconciled.
• TurboTax will compute that you have $4596 of expenses to use for the Child and Dependent Care Credit

Then based on your total income, you will get a percentage of the qualified expenses for your credit.  It will be anywhere from 20% to 35%. 

  

This credit can only be used to reduce your tax liability. 

[psychoanalyst]

thanks so much for breaking that down. 

I fall into the income bracket where my decimal amount is 0.2. 

Here is still the difference.

Cash-App is doing 0.2 x $4596 = $919 in Lines 9a, 9c and 11.

I obviously can't see under the hood with TT, but in the summary page, my child and dependent care credit is listed as $991 = 0.2 x $4953. So it appears to me that TT is NOT reconciling the $357?  

Both Cash-App and TT agree on my CA State refund, but my federal returns between the 2 differ exactly by $72 (=$991-$919). I have double and triple checked all my inputs and confirmed that everything has been reported correctly as far as incomes and FSA contributions are concerned. 

[CatinaT1]

We can't see your return, but go to Tax Tools on the left side of your screen and click on Tools > View Tax Summary > and then on the left again, Preview 1040.

The $357 has already gotten tax benefit, so you can't use it for the Child and Dependent Care Credit. Based on what you have said above, your credit should be $919.

In the income section, I entered box 10 of the W2 as $357. Here I entered $3000 for daycare expenses, and TurboTax automatically shows I have $2643 of qualifying expenses. And where I highlighted, it shows the removed amount due to the care benefit. ($3000-$357=$2643). In my example, I only have one dependent entered, but it should function the same way as long as you enter $2476 worth of expenses under each child.

Is this what you see when for your entries?

[psychoanalyst]

This is what the equivalent page looks like for me. TT is not subtracting the $357 for some reason. And I also confirmed my entries to ensure that Box 10 shows $357. 

I am not sure what I am doing wrong.....or if this is a bug in TT. 

Thanks a ton for working through this for me! 

[BillM223]

TurboTax handles the $357 from box 10 in Part III of the 2441. The $357 appears on the 2441 on lines 12, 15, 17, 20, 23, and 25. The last line is the "excludable benefits", which is correct.

Then, this $357 is subtracted from the expenses of $4,953 on line 1, to make $4,596 on line 2.

The net result is a credit of $919 on lines 9a and 9c.

As for the summary page, these summaries are sometimes confused. The numbers that matter are the ones on the actual forms.

Note that you can see the actual form 1040 and Schedules 1, 2, and 3 even in the Online product, following Catina's instructions above. You should see the $919 on line 2 of Schedule 3.

Does this work for you?

[psychoanalyst]

The problem remains. I just reviewed Line 2 of Schedule 3 and it is listed as $991 and not $919. 

[CatinaT1]

I'm not able to duplicate what is happening for you: 

Once you enter your expense, you can't go back to two questions that were asked before entering this which were about your FSA.

Is this what you are seeing on your 2441?

[psychoanalyst]

Yeah...not sure why I am not able to get the same results as you.......

I can't see Form 2441 with TT, but I can confirm that the Form generated via Cash App looks like what you have shown.

But high level: I think I got the answer I was looking for. My credit should indeed be $919 and not $991.......and I think I will just go with Cash App this year......I don't want to spend any more time trouble-shooting TT.....especially since I have cleared and done my taxes twice with TT with the same result. 

Many thanks for all the help and advice.