IRS rejected return for FED_2441

[dreameyeyed]

My federal tax return was rejected due to code FED_2441_DCB_MFS, related to child tax credits. I did not claim any credits as my spouse (filing separately) claims our child as his dependent and I do not claim him as a dependent at all. I got a response from Turbo Tax that this issue is related to a fix that they will not have a release for until April 14, 2023. This is cutting it rather close. Has anyone else had this issue or know how to resolve it?

[xmasbaby0]

Not sure why you have anything on your own tax return regarding the childcare credit.  If you are filing married filing separately, neither one of you is eligible for the child care credit.  You lose that credit when you file MFS.

https://ttlc.intuit.com/questions/2580507-how-do-i-delete-form-2441-in-turbotax-online

[dreameyeyed]

I honestly didn't know that! We hadn't been flagged before, thank you for calling that to my attention. My spouse already submitted his tax return though and had no issue. Could his return be triggering a reject on mine even though I claimed no credits? Also, this wouldn't affect my ability to take advantage of dependent care FSA benefits from my employer right? That's completely separate?

[AmyC]

1.Since his return has been filed with your SSN as the spouse, the IRS will cross reference your returns.

2. You have an FSA for child care, the program expects child care expenses. You can't claim child care expenses as MFS which makes the FSA taxable to you. Delete all child care information.

3. Putting money into an FSA just to have it taxed at tax time, doesn't really make the most sense. You can if you want.

4. Separate FSA and work until you do your taxes and put it all together.

See this article. You can amend his return and add you. Then, you would qualify for more credits.

[dreameyeyed]

@AmyCThanks for your feedback. I went in and checked my return. I can't delete my child from the records, but in going through my last 4 years of taxes since he was born I have never claimed him as a dependent or taken any deductions/credits. It's gone through just fine before. I'm not sure why it's still triggering an error that there's something wrong with the calculations when there are no calculations? Would the reject on the federal also cause a reject on the states because both my states were rejected but zero reason was given. I just want to be able to pay my taxes on time and still have time to sort this out. Thanks!

[CatinaT1]

• Do you have any Dependent Care Expenses entered on your return?
• Have you tried filing again since the initial reject?
• If the federal is rejected, the states will automatically reject.

Also, this wouldn't affect my ability to take advantage of dependent care FSA benefits from my employer right? That's completely separate?

Yes, this would affect your ability to take advance to the FSA benefits, and it is not completely separate.

There is no reason to use an FSA if you are not claiming the Child Care Credit. When you have an FSA, it is reconciled on your tax return. If you do not have the child care expenses to show that is what the FSA is used for, the money from the FSA is taxable and added to your return as income. You are getting no benefit from having the FSA. If you are not claiming the child and the associated child care on your return, there is no reason to have an FSA.

[xmasbaby0]

@dreameyeyed 

Since you filed MFS you cannot get the childcare credit, and the money you put into that FSA is just going to go back into taxable income.   

You did not realize that about your filing status, which makes me wonder what else you may not have realized about filing married filing separately.  That is usually the worst way to file, especially if you have a child.

If you were legally married at the end of 2022 your filing choices are married filing jointly or married filing separately.

Married Filing Jointly is usually better, even if one spouse had little or no income. When you file a joint return, you and your spouse will get the married filing jointly standard deduction of $25,900 (+$1400 for each spouse 65 or older)  You are eligible for more credits including education credits, earned income credit, child and dependent care credit, and a larger income limit to receive the child tax credit. 

If you choose to file married filing separately, both spouses have to file the same way—either you both itemize or you both use standard deduction. Your tax rate will be higher than on a joint return. Some of the special rules for filing separately include: you cannot get earned income credit, education credits, adoption credits, or deductions for student loan interest. A higher percent of your Social Security benefits may be taxable. Your limit for SALT (state and local taxes and sales tax) will be only $5000 per spouse. In many cases you will not be able to take the child and dependent care credit. The amount you can contribute to a retirement account will be affected. If you live in a community property state, you will be required to provide additional information regarding your spouse’s income. ( Community property states:  AZ, CA, ID, LA, NV, NM, TX, WA, WI)

 If  you are using online TurboTax to prepare your returns, you will need to prepare two separate returns and pay twice.

https://ttlc.intuit.com/questions/1894449-married-filing-jointly-vs-married-filing-separately

https://ttlc.intuit.com/questions/1901162-married-filing-separately-in-community-property-states

https://ttlc.intuit.com/questions/1894449-is-it-better-for-a-married-couple-to-file-jointly-or-separ...

You and your spouse could amend to file a joint return.

https://ttlc.intuit.com/questions/1899507-how-do-i-amend-a-separate-return-to-married-filing-jointly