Idaho child and dependent care deduction - Error

[Tax231]

Anyone else having issues with the Idaho Child and Dependent Care?  TurboTax reached out stating the issue was resolved but the error is still there. 

The 39R worksheet is not sourcing information correctly from Form 2441, resulting in the Idaho filing not including any out-of-pocket daycare expenses to qualify for the Idaho deduction.  Some other posts seem to show the same problem, although in their case the Idaho filing appears to double dip on pre-tax benefits (dependent care FSA) up to $12,000 allowed.   

[LeticiaF1]

There was a software update on March 8 to correct this issue.   Before you open your return again:
 

• If using TurboTax Online: Clear your cache and cookies. See this FAQ, for your particular browser.
  • You can also try using a different browser
• If using TurboTax Desktop: Please see this FAQ.
  • Make sure you have ran all the updates

Feel free to contact us again if  this does not resolve it.  

[Tax231]

Thank you for the reply. Clearing the cache and using a different browser did not help. 

[BillM223]

In the Idaho instructions, there is a worksheet for calculating Line 6 on the Idaho form 39R Subtractions:

Worksheet 

1. Enter the amount of qualified expenses you incurred and paid in 2023. Don’t include amounts paid by your employer or excluded from taxable income ........... 

2. Enter $12,000 for one or more child or dependent cared for during the year ...... 

3. Enter excluded benefits from Part III of Form 2441 .............................................. 

4. Subtract line 3 from line 2. If zero or less, stop. You can’t claim the deduction ................................................ 

5. Enter your earned income ...................... 

6. If married filing a joint return, enter your spouse’s earned income. All others enter the amount from line 5 .................. 

7. Enter the smallest of lines 1, 4, 5, or 6 here and on Form 39R, Part B, line 6 .

Can you tell us which line you think is wrong and why?

[Tax231]

Yes, the issue is that the system is not generating the worksheet and simply inputs $0 on line 6 of the 39R form.

I don’t know the reason, but my assumption is that because we don’t qualify for the federal dependent care credit, it automatically assumes we don’t qualify for the Idaho deduction.  These numbers are not the actual number but are used for illustrative purposes. 

-Total daycare expenses: $9,000

-Pre- tax FSA contributions: $5,000 (box 10 of w2)

-1 child, and combined earned income of $100,000

This is what it should be on the form

1. $4,000 (9k total minus 5k pre-tax FSA contributions)

2. $12,000

3. $5,000

4.  $7,000

5. $50,000

6. $50,000

7. $4,000 (Lowest of 1, 4, 5, 6) this is the number that should go on line 6 of 39R instead of $0.

[BillM223]

The instructions state, "Line 6 Child and Dependent Care If you claimed the federal Credit for Child and Dependent Care Expenses, you’re allowed an Idaho deduction for the child care expenses you paid for the care of your dependents. "

I wondered if Idaho meant that literally - no federal credit, no Idaho deduction.

So I called the State on Tuesday or Wednesday, and I finally got the callback. The agent at the Tax Office said, "no form 2441 on the federal, no Idaho deduction".

I think it may be possible to have a 2441 on the federal without getting the credit, but that's not the way that TurboTax is written. TurboTax is following the literal instructions - no 2441 credit, no Idaho deduction. And the Tax Office in Idaho is not suggesting an alternate interpretation.

@Tax231 

[Tax231]

Thank you for the reply. That would be an interesting interpretation by Idaho given the way the Idaho code is written (no reference to the federal credit) but it’s possible. I spoke to someone at TurboTax the other day and they basically told me the same, TurboTax is written to have no Idaho deduction if there is no federal deduction. The alternative is to file federal using TurboTax and file Idaho manually (not using TurboTax software since the numbers would be wrong) and include the 2441 that gets generated with the federal return even though the deduction in that form is $0.