Turbo tax is automatically adding second child for child care expense credits. There is a bug in interface that shouldn't do it automatically or option not to do it.

[Meme1]

I have 2 children, one for child care credit and one that the other custodial parent is claiming for the child care credit.

This year TT is adding the second child automatically and doesn't give an option to remove them.

e.g. On the dependents and credits, when you enter child care expenses over 3k the interface adds the second automatically and it shouldn't. I want to use 1 child as the shared custody child is not applicable but TT keeps adding the other child with no way to remove them without a lot of wrangling. Last year this wasn't a problem.

[Critter]

If you answer the questions correctly in the MY INFO section for each child the correct items should be listed ... there are specific items the custodial and non custodial parents ( who do not live together ) get to take ... so delete the problem child and re enter them from scratch ... if you are splitting up the child onto 2 separate returns : 

Only the Custodial parent can claim: (Child would be listed as non-dependent EIC & CC only)
-Head of Household 
-Earned Income Credit
-Child Care Credit

The non custodial parent can only claim: (Child would be listed as dependent)
-The Exemption
- The Child Tax Credit

[Meme1]

Right but it doesn't explain why TT adds the second child automatically when there are no Care expenses for that child. That seems like tax fraud on TT part.

[Critter]

If you have 2 qualifying children listed on the return ( dependents under age 13) then even if you have no expenses for the second child the form 2441 allows them to be listed to raise the credit limit from $3000 to $6000 of allowed expenses ... this is correct per the form 2441 instructions.

[Meme1]

Right but it's not correct when it doesn't give you the option to not do it. Esp in the case of split custody. E.g. it doesn't allow you to undo it and it adds it automatically with no option.

[Critter]

If both parents live together then ONLY ONE of you will enter  the kids in the program ... if you live together you CANNOT split a child in ANY way .... the split I posted above is ONLY for parents who live apart for at least the last 6 months of the year.   



There is no such thing in the Federal tax law as 50/50, split, or joint/split  custody.  The IRS only recognizes physical custody (which parent the child lived with the greater part, but over half, of the tax year.  That parent is the custodial parent; the other parent is the noncustodial parent.)

Who can claim the exemption and credits depends on who is the custodial parent. (By the IRS definition of custodial parent for tax purposes - this is not the same as the custody that a court might grant.).

The test that the IRS uses to determine the custodial parent is where the child lived for more than 1/2 (or greater part) of the year. The IRS will go so far as to require counting the nights spend in each household - that person is the custodial parent for tax purposes (if exactly equal and more than 183 days - The custodial parent is the parent with the highest AGI, if less than 183 days then neither parent has custody). That can usually only occur if both parents lived with the child at the same time.   And yes they are that picky.

The custodial parent may claim everything child related  UNLESS they waive the dependency exemption to the non custodial parent via a form 8332.... in that case the child may be used on 2 separate returns but only in the following way :

Only the Custodial parent can claim: (Child would be listed as non-dependent EIC & CC only)
-Head of Household
-Earned Income Credit
-Child Care Credit

The non custodial parent can only claim: (Child would be listed as dependent)
-The Exemption
- The Child Tax Credit

[Meme1]

No you are wrong, the child is claimed based on what was set in the decree if one exists with form 8332. Where the child lives is irrelevant. The problem is when you have multiple children say 2(one is not an issue the other is covered by 8332 and only want to claim the first child for the dependent care. TT is auto adding the other regardless of 8332 or otherwise. That's a bug.

[Critter]

NO ... not a bug ... the program follows the IRS regulations  and the  IRS rules on an income tax return are superior to any civil court  ... what a divorce decree says is immaterial .... it cannot override federal tax laws  .... now if the custodial parent MUST release the exemption to the non custodial parent then they MUST give the other parent a form 8332.   The child cannot be divided to 2 tax returns in any other way then it is listed above ... so the non custodial parent CANNOT take the day care credit EVER ... this cannot be dictated by any civil court. All the non custodial parent can take is the exemption and the CTC.

So  the custodial parent claims the 2441 on both kids, gets the EIC on both and uses one of them for HOH filing status. ALL the child care expenses, no matter who paid them, goes on this person's return ONLY.  

And the non  custodial parent can only list the kids as dependents and that gets them the CTC as well. This is all they are allowed per the IRS rules.   See Special rule to divorced or separated parents (or parents who live apart) on page 32:
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/p17.pdf">https://www.irs.gov/pub/irs-pdf/p17.pdf</a>

[rdwilhelm]

I had the same problem that was not able to show name of child not being claimed as a dependent but was being claimed for Head of Household status and EIC.  No matter what I did it always wanted to add child as a dependent.  Called TurboTax but they claim only a child listed as a dependent could be claimed for EIC.  Wrong - Federal Tax instructions do allow a nondependent child to be eligible for Head of Household status and EIC.  I finally got around by going through form views and not using Step by Step.

Told TurboTax that I believe this is an error in their step by step program but I doubt if they were going to pass on the problem to whoever can make necessary modifications to the program.

[Critter]

Using the FORMS mode can compromise the accuracy warranty and keep you from efiling ... always use the step by step mode when possible ... when you answer the questions correctly you will not only get HOH for the child but the EIC and Day Care Credit ...

[rdwilhelm]

I am reading that you can claim a dependent for Head of Household credit without claiming as a dependent on 1040.  See copy of 501 Publication below. Publication 501 (2020), Dependents, Standard Deduction, and Filing Information

For use in preparing 2020 Returns

Head of Household

You may be able to file as head of household if you meet all the following requirements.

1. You are unmarried or considered unmarried on the last day of the year. See Marital Status , earlier, and Considered Unmarried , later.
2. You paid more than half the cost of keeping up a home for the year.
3. A qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school). However, if the qualifying person is your dependent parent, he or she doesn't have to live with you. See Special rule for parent , later, under Qualifying Person.

.

If you qualify to file as head of household, your tax rate will usually be lower than the rates for single or married filing separately. You will also receive a higher standard deduction than if you file as single or married filing separately..

How to file.

Indicate your choice of this filing status by checking the "Head of household" box on the Filing Status line at the top of Form 1040 or 1040-SR. If the child who qualifies you for this filing status isn't claimed as your dependent in the Dependents section of Form 1040 or 1040-SR, enter the child's name in the entry space at the bottom of the Filing Status section. Use the Head of a household column of the Tax Table or Section D of the Tax Computation Worksheet to figure your tax.