Turbo tax adds my pre-tax child care FSA payroll deduction ($2500 for 2018) to my wages on the 1040 line 1. My wife and I both have earned income. My wife's earned income (schedule C line 1 is positive) has expenses that offset it so she shows $0 for net profit for her independent consulting business (schedule C line 31). I believe as a result turbotax does not even ask us to input our child care expenses and automatically adds the FSA payroll deduction to my wages. Form 2441 line 16 is 0 (no child care expenses). Form 2441 line 19 is also 0. When I look at the instructions for form 2441, the IRS clearly states that I should be using my wife's earned income from schedule C line 1 here and not from schedule C line 31. I believe this is a bug in turbo tax. The only way it seems I can fix this is to manually override the numbers on form 2441 to include a positive number on line 16 and 19. Am I correct?
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You may be misinterpreting the Form 2441 instructions relating to Schedule C income.
Your wife's entry on line 4 or 5 of Form 21 would be line 1 of Schedule C, if she's a statutory employee. A statutory employee would have the "Statutory employee" box checked in box 13.
If that box is checked on her W-2, and she's actually a statutory employee, make sure the box is checked on the W-2 that you've entered in TurboTax. The computation should be fine then.
If she's not a statutory employee, then her earned income, based on what you're saying, would actually be zero, and you wouldn't be eligible for the credit.
Just as an FYI, please see the IRS' Statutory Employees page to see what qualifies as a statutory employee.
You may be misinterpreting the Form 2441 instructions relating to Schedule C income.
Your wife's entry on line 4 or 5 of Form 21 would be line 1 of Schedule C, if she's a statutory employee. A statutory employee would have the "Statutory employee" box checked in box 13.
If that box is checked on her W-2, and she's actually a statutory employee, make sure the box is checked on the W-2 that you've entered in TurboTax. The computation should be fine then.
If she's not a statutory employee, then her earned income, based on what you're saying, would actually be zero, and you wouldn't be eligible for the credit.
Just as an FYI, please see the IRS' Statutory Employees page to see what qualifies as a statutory employee.
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