If HOH with $9000 in child care expenses, 1 qual. child, Turbo Tax is listing my dep. care credit as $3250, when I think I should get the full $4000 (50% of $8k)?

[hamster70]

This is regarding Dependent Care Credit, no the Child Tax Credit. My income is definitely under $125k, and expenses up to $8k are eligible. I entered all my care expenses which total a little over $9000. I am not sure why I am not receiving the maximum credit ($4000) for 2021, since the expense limit went up. I have 2 dependents, but only one is under 13. Turbo Tax is only showing $3250 as my credit for 2021.

[JulieS]

A qualifying child for Child and Dependent Care Credit must be under age 13 when the care was provided,  or person who wasn't physically or mentally able to care for himself or herself. Based on what you say here, you only have one qualifying dependent.

[hamster70]

Yes, that's correct, I do only have one qualifying dependent, I'm not confused about that. The max credit this year is 50% of 8000 (for one). I spent $9000, so why isn't TurboTax showing my credit as $4000 instead of $3250.

[AmyC]

The are income phaseouts.

For single and MFS, $75,000

For HOH                   $112,500

For MFJ, QW            $150,000

You may be hitting a phaseout so that it is reducing the credit.

[hamster70]

Would the income take into account "other" income? My MAGI is definitely under $112,500 (I'm HOH), and so is my gross income from my W-2. But if I added up all income I could be close or barely over that -- I'd have to double check. 

[AmyC]

Modified AGI uses all income and deductions. I wonder if there is an input issue. The phaseout is $50 for each $1,000 your MAGI exceeds the phaseout.

For single and MFS, $75,000

For HOH                   $112,500

For MFJ, QW            $150,000

[Mike9241]

was your earned income (w-2)  6500 or did you employer, if you had one, provide dependent care benefits - box 10 of w-2.

if neither of these are the case you'll need to review 2441 where the credit is calculated

line 3 should be $8000

line 4 will be your earned income

the credit is 50% of the lower of the two.

[hamster70]

No dependent care benefit through my work. I'm not sure what you mean about the first one. I have W-2 income and do not qualify for EIC. MAGI is under $100k.

[hamster70]

@AmyC do you know of any input issues I should look at? The only thing I can think is that TT is using ALL income, not MAGI? But even then I can't see why it would be lowering it by $750...because I would barely be over $112,500.

[AmyC]

@Mike9241 is correct that the best thing for you to do is to look at the actual form 2441 and see what it says. If you have not yet paid for your return, I would suggest you do that so you can see the forms. Go to the print area to view the form. Make sure line 3 is $8000. Check line 4 to see what is coming over for income, check the calculations.

[hamster70]

Ok, I haven't paid for TT yet, so I haven't checked the form. I reviewed the dependent care section again and when I went through all the steps, in the VERY beginning it said, "how much did you pay for XX's care?" For some reason that was populated with "$6500" -- I don't know where that came from, if that maybe came from my 2020 return or if I estimated it at some point??? I don't remember filling in that field previously. When I updated that and manually entered $8000 there, and then later verified that I had entered all of the $9k plus (with the social security/EIN numbers, etc.), THEN that gave me the full $4k credit. 

[AmyC]

So very glad for you that you found the data entry issue and are getting the full credit.