Turbotax will not apply tax credit for daycare expenses

[gtriana]

I am filing as married filing jointly. We both work and have W2's entered. Our total income is under $200k.

Under DEPENDENT CARE CREDIT, it says NOT ENTERED for 2025. When I enter in our $15,420 in daycare expenses with my provider's EIN, it just tells me "It looks like you don't qualify" with no explanation.

My calculations show that Turbotax would be shorting me a $2,500 refund if I file with them. I like using the software every year for a reasonable $80 fee but not if I will lose $2,500 due to an error. Any help would be appreciated.

[DawnC]

Did you go through the Dependent Care interview completely?   You have to enter your total amounts and then you have to enter each provider (with tax id) and the totals you paid to each provider.  Then the credit will calculate.  Make sure you go through the interview completely.     

Also, make sure your dependent information is entered correctly and that they qualify.   If you have and FSA and/or amounts in box 10 of your W-2, your credit will be limited.

[gtriana]

Yes, I went through the interview completely many times. We only have 1 provider. My answers to questions about credits an carry-over are $0.

We do have just under $5k in box 10 of one of our W2s. If you deduct that from the daycare expenses entered ($15k), we should qualify for a $2k deduction on the remaining $10k of daycare expenses as I understand it.

[ThomasM125 · Accepted solution]

You can only consider a maximum of $3,000 expense per child or $6,000 total for the Child and Dependent care credit. Since you said there is $5,000 of employer provided child care per the entry in box 10 on your W-2 form , that would eliminate the qualifying expenses if you had only one child, as it is more than the $3,000 allowed. If you had two or more qualifying children, the maximum credit you would qualify for would be $200, or $6,000 less your employer contribution of $5,000 times 20%.

Also, you need to make sure when you enter your W-2 forms that you earmark one for you and another for your spouse. If you mistakenly enter them all under one taxpayer's name, you would not get a child care credit as you both must work.

If you can clarify how many qualifying children you have we may be able to help you better.

You can learn more in this IRS article.