I pay for childcare, but it won't allow me to add that into my expenses. Why does this occur?

[ThomasM125 · Accepted solution]

Your child care costs may be  allowed to afford you a child or dependent care credit, they would not be allowed as a deduction. You may be allowed up to $3,000 for one child and $6,000 if you have two or more children. The percentage of the child or dependent care costs allowed as a credit varies from 20 to 35 percent, depending on your income. The allowed expenses would be reduced by any non-taxable child or dependent care benefits offered by your employer.

Here is how you would enter your childcare expenses in TurboTax:

1. From the Federal module in TurboTax, go to the Deductions and Credits Section

2. Find the You and Your Family menu option

3. Choose Child and Other Dependents Tax Credit

4. Work through that  section to enter your child or dependent care expenses

[xmasbaby0]

CHILD AND DEPENDENT CARE CREDIT

You will not get the childcare credit until (unless) you enter income earned from working.   The credit does not work unless you enter your income first.   If you are filing a joint return you must show income for both spouses, or show that one or both of you was a student or disabled.   If you have self-employment income and show a loss you will not get the childcare credit.  You will not get the credit if you are filing married filing separately.  

If you have entered all of your income and you have entered your dependent(s) then work on the childcare credit by entering the Tax ID or Social Security number of your childcare provider and enter the amount you paid for the childcare.

One of the most common mistakes that messes up the childcare credit for people is listing all of the earned income under only one name on a joint return.  Make very sure that your incomes are listed under each of your names.  It’s pretty easy to check.  Go to the Income section, and click “update” on Wages and Salary.  That will take you to the W-2 Summary.  Do you see income listed under both of your names? 

 The person receiving the care had to be 12 or under or qualified as mentally or physically disabled. To claim the childcare credit you need to be filing as Head of Household or Married Filing Jointly. (NOT married filing separately)

 If your child was born in 2022 make sure you say the child lived with you all year. The credit is a percentage of your expenses based on your AGI (the higher the income, the lower the percentage)  You must provide the Social Security number for each child you are claiming, and the Social Security number or Tax ID for each care provider. 

In the case of divorced or never-married parents—only the custodial parent can use the childcare credit.

And remember that the childcare credit is a NON-refundable credit.  It can reduce your tax owed down to zero, but it is not added to your refund.

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

[Carl · Accepted solution]

Child care expenses are not deductible as a direct expense anywhere on the federal tax return. However, if you qualify, you get a child care "credit" of up to $3K. You deal with that under the Deductions & Credits tab in the My Family section, when you get to it.