How has the Credit for Child and Dependent Care Expenses changed from 2021 to 2022? My credit in that area is SIGNIFICANTLY less than it was last year.

[xmasbaby0]

The child and dependent care credit has changed from 2021 to 2022.   It has reverted to the "old" rules.   The credit is not refundable.  It can only reduce tax you owe.  And it is limited to a credit of $3000 for one child or $6000 for more than one child.

https://ttlc.intuit.com/questions/1900643-what-is-the-child-and-dependent-care-credit

[DMarkM1]

You are correct the maximum amount of dependent care expenses that can be used to calculate the Dependent Care Credit in 2022 is $3000 for one child and $6000 for two or more.  In 2021, those maximums were 4,000 and 8000 respectively.  That means, depending on your income the maximum credit in 2021 was 35% of 8000 (2800) and in 2022 it is 35% of 6000 (2100). 

Additionally, in 2021 the credit was refundable meaning even if your tax was zero, you could get the credit as a refund, but in 2022 that is not the case.  Once your tax on line 18 of your form 1040 is reduced to zero no more nonrefundable credits are allowed.  

You can see your form 1040 using forms mode in desktop versions and using the steps below in online versions of TurboTax.

1. Select "Tax Tools" in the left hand menu
2. Select "Tools"
3. Select "View Tax Summary"
4. Select "Preview My 1040" in the left hand menu   

[aesmith4]

Since the credit is non-refundable, is that why it doesn't show in the taxes paid plus certain credits?

[DMarkM1]

Yes, you are correct.  That section is refundable items such as withholding and estimated taxes paid and refundable credits.

[aesmith4]

Next question then.  Why does an amount in Box 10 create more taxes owed?  I thought that those FSA contributions are non-taxable as long as they are used for qualifying child care expenses (which they were) and I have already entered my child care costs.  All information has been entered but it doesn't look like the info in Box 10 is being applied correctly.

[KrisD15]

An amount in Box 10 on a W-2 would not create tax on the income but it could limit the credit for expenses you entered. 

So if the program first computed a credit for Child and Dependent care expenses. but then you entered an amount in Box 10, the expenses the program assumed you paid out-of-pocket (and applied towards a credit) are eliminated by the "tax-free" assistance reported in Box 10.  

In this case, the credit is lowered or eliminated, resulting in a higher tax liability than when the credit was first applied (without that amount in Box 10).