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ch3v3l3ft
New Member

My Child and Dependent Care Credit is $234 but is not increasing my return, why?

This matters because I must upgrade from the free version in order to claim this credit but it is seemingly all for nothing. My price for free version is $0 when all is done and ready to file whereas once i upgrade to the deluxe version for $60 I am forced to pay for the State filing for an additional $40 bringing my total cost up to $100. 

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Accepted Solutions
DanielV01
Expert Alumni

My Child and Dependent Care Credit is $234 but is not increasing my return, why?

You can downgrade if you choose.  I will provide an FAQ at the end of my answer to give instructions on how to do this (you will have to start your return over though).  But let me explain what has happened:

The Tax Cuts and Jobs Act changed the Child Tax Credit.  It used to be that the credit was $1000 per child, and, if your tax liability was zero, the unused portion of the credit could be refundable depending on your earned income.  A credit like the Child and Dependent Care Credit (a nonrefundable credit) would always help a greater portion of the Child Tax Credit to become refundable unless your tax was already at zero.  For this reason, nonrefundable credits such as the Dependent Care Credit were always calculated and deducted before the Child Tax Credit, because doing so increased the refund.

Now, under the TCJA, the Child Tax Credit is potentially $2000 per child.  But, only $1400 of that $2000 is potentially refundable, which means that $600 of the credit per child is nonrefundable.  However, the IRS has not changed the order of taking the credits, which leads to credit redundancy.  Your nonrefundable credit of $234 for Dependent Care Credit is "absorbed", for lack of a better word, by the nonrefundable portion of the Child Tax Credit.

If that credit was the only reason why you were being upgraded to Deluxe, you can Clear and Start Over to go back to the Free edition, and don't enter your daycare information, because you won't need it.  This FAQ I promised explains how:  https://ttlc.intuit.com/replies/3288495

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5 Replies
DanielV01
Expert Alumni

My Child and Dependent Care Credit is $234 but is not increasing my return, why?

Have you already upgraded?  Also, do you have any amounts in Box 10 of your W2, which is for an FSA for dependent care?
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
ch3v3l3ft
New Member

My Child and Dependent Care Credit is $234 but is not increasing my return, why?

I have upgraded and there is nothing in box 10 of my W-2
DanielV01
Expert Alumni

My Child and Dependent Care Credit is $234 but is not increasing my return, why?

You can downgrade if you choose.  I will provide an FAQ at the end of my answer to give instructions on how to do this (you will have to start your return over though).  But let me explain what has happened:

The Tax Cuts and Jobs Act changed the Child Tax Credit.  It used to be that the credit was $1000 per child, and, if your tax liability was zero, the unused portion of the credit could be refundable depending on your earned income.  A credit like the Child and Dependent Care Credit (a nonrefundable credit) would always help a greater portion of the Child Tax Credit to become refundable unless your tax was already at zero.  For this reason, nonrefundable credits such as the Dependent Care Credit were always calculated and deducted before the Child Tax Credit, because doing so increased the refund.

Now, under the TCJA, the Child Tax Credit is potentially $2000 per child.  But, only $1400 of that $2000 is potentially refundable, which means that $600 of the credit per child is nonrefundable.  However, the IRS has not changed the order of taking the credits, which leads to credit redundancy.  Your nonrefundable credit of $234 for Dependent Care Credit is "absorbed", for lack of a better word, by the nonrefundable portion of the Child Tax Credit.

If that credit was the only reason why you were being upgraded to Deluxe, you can Clear and Start Over to go back to the Free edition, and don't enter your daycare information, because you won't need it.  This FAQ I promised explains how:  https://ttlc.intuit.com/replies/3288495

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
ch3v3l3ft
New Member

My Child and Dependent Care Credit is $234 but is not increasing my return, why?

Thank you very much for shedding light on that. I had suspected something like that might have been going on with the new tax laws but couldn't find appropriate answers in the FAQ
DanielV01
Expert Alumni

My Child and Dependent Care Credit is $234 but is not increasing my return, why?

You are welcome.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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