claiming child care in a foreign country

[dkahn04]

I live in Belgium and during 2021 had two small children in local day cares.  I wasn't aware we were able to claim these costs at all and have not done so in previous years.  Is this new?

My real question though is how to do this given that we're in another country.  I can still claim it according to the software, but I feel almost guilty doing it.  Is this really kosher?  If so, how do I tabulate the costs, given that they were paid in Euros?

[DanaB27 · Accepted solution]

No, the Child and Dependent Care Credit is not new.

Yes, if you meet the requirements then you can claim the Child and Dependent Care Credit. Please see What is the Child and Dependent Care Credit for requirements.

You can selected in TurboTax that you used a foreign provider:

1. Login to your TurboTax Account 
2. Click on  "Search" on the top and type “child care”
3. Click on “Jump to child care”
4. Continue until "Let's get some info about your care provider" screen and select "Other" and then "Foreign Provider"

You will have to translate the EUROS in US currency. The Internal Revenue Service has no official exchange rate. Generally, it accepts any posted exchange rate that is used consistently

You can add up all expenses and use the IRS average annual exchange rate if all expenses were paid evenly during the year. Please see IRS Translating foreign currency into U.S. dollars the rates and additional details.

Also, you can look up past daily, monthly, or yearly exchange rates online. For example, you can look up the pay date or use the monthly rate.

[dkahn04]

Thanks, this is very helpful.  What about the fact that we took full advantage of the $10,000 FSA limit for child care in 2021?  Do I subtract that from the child care expenses, or does TurboTax already figure that out, based on my entries from my W2?

[DanaB27]

Yes, when you enter your W-2 the FSA information transfers over automatically to the Form 2441 screen (Child and Dependent Care Credit), where you enter in the amount of actual expenses you had.  The FSA is subtracted from your allowed daycare payments and, if you have leftover expenses, they are used to calculate additional expenses.