Where do I input dependent care FSA info?

[Opus 17]

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@jakubdudek wrote:

Thanks,  I have filled out my child care expenses in the "child and dependent care credit" already.  It simply tells me "It turns out you don't qualify for this credit"

If you provided care for one child, the maximum eligible expenses is $3000.  If your FSA is more than that, then you can't claim the credit on top of the FSA.  The FSA is better than the credit for most taxpayers anyway. 

If you provided care for 2 or more children, the maximum eligible expenses is $6000, and the maximum FSA is $5000, so it is possible to have an FSA and also have $1000 of eligible expenses for the credit.

However, you still need to do that section of the program to create form 2441 so that it resolves the amount of your FSA benefit in box 10 of your W-2. 

[jakubdudek]

thanks for the detailed help.  Yes indeed, if I look at my 1040, I see DCB written in and the amount written in is the total of my W2-box1 + $5000 (ie + the FSA total as though I had no eligible expenses)

[Opus 17]

In that case, make sure you have claimed a dependent with a valid social security number, who lived in your home more than half the year.  A dependent who you claim via a divorce order but does not live with you, does not qualify.  Also, you and your spouse, if married, must both have income from working, or have been students.   

[jakubdudek]

I reviewed my dependent, all information is in.  They are my children, social security numbers, live with us all year, etc...

[jakubdudek]

Ah!  you've found the problem.  I have not entered my wife's income yet, so it probably looks like she's not working therefore my expenses currently look ineligible.  This is ringing a bell from previous years!  thanks.

[catsnrabbits]

I don't have "My Accounts" as an option only "Intuit Account" which does not have a Tools or Tax Summary. 

[MarilynG1]

@catsnrabbits  You have to actually be in your return to see the 'Tools' in the left-side menu (screenshot).

Click on Tools, then Tax Tools, then View Tax Summary from the popup menu (screenshot).

Click this link for instructions on How to Manually Enter a W-2. 

[jakubdudek]

I guess I spoke too soon.  I added my wife's K1 income and child care expenses are still being taxed.  What should I look at next?

[AmyC]

@jakubdudek K-1 income is often passive. Is she an active participant? Child care expenses only count if your spouse works, goes to school or disabled.

[Opus 17]

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@jakubdudek wrote:

I guess I spoke too soon.  I added my wife's K1 income and child care expenses are still being taxed.  What should I look at next?

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Your spouse must have earned income.  That generally means income earned from working, and is usually defined as income that is subject to either social security withholding or self-employment tax. 

[catsnrabbits]

I'm sorry - let me explain my issue better. In Turbo Tax, they ask you if any funds were left in your FSA at the end of the year. I need to go back and update this number, and cannot seem to find it in Turbox Tax's line of questions. Can someone tell me where I can find to alter this number? It's somewhere towards the end of entering income and before getting into the actual dependant care payment area. 

[PattiF]

I am assuming that you had an entry in box 10 of your W-2, for your FSA contribution. 

Go back to your W-2 interview (Federal->Wages & Income->Wages & Salaries) and click on Start or Revisit for "Wages and Salaries".

If you made an entry in box 10 of the W-2 (Dependent Care Benefits), then in the next several screens after the W-2, it will ask you if you have an FSA and how much money was left in it at the end of the year. This is where you would update the number.

[lmasseycpa]

You might try looking at the entry fields for the Form 2441...in my Lacerte software (an Intuit professional tax preparer-type software) that's where this entry goes...there is a general information screen for relatively unusual items like this...and that's where you make this entry...this should then show up on your Form 8821, page 2.  Review closely!  (I am doing this right now with an entry identical to yours which was included in AH on a Form K-1(1065).

[Green Leaf]

Hi @Opus 17 , I have the same situation where dependent care expense is less than DCFSA .

The dependent care cost is $1000 and the DCFSA is $1500.

(A)  Are the following steps of reporting the 'FSA' & 'dependent care credit' correct?

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

1. Box 10 of W2 is automatically filled up through the import of W2

2. "Did XXX provide child or dependent care on-side at your workplace?" --> No

3. "Did you have a Flexible Spending Account to pay for child or dependent care?" --> Yes

4. "Any leftover money from your Flexible Spending Account?" --> $500

In Child and Dependent Care Credit section,

5. "How much did you pay for CHILD1's care in 2020? Be sure to also include money paid from a Flexible Spending Account (FSA) or cafeteria plan. Total dependent care expenses you paid for CHILD1" --> $550

6.  "How much did you pay for CHILD2's care in 2020? Be sure to also include money paid from a Flexible Spending Account (FSA) or cafeteria plan. Total dependent care expenses you paid for CHILD2" --> $450

7.  In "Here's what we have so far" page,

     It has this note => "You have $$DCFSA$$ of employer-provided care benefits. In order to received this credit, your expenses below must be more than this amount"

     In the table, it shows CHILD1  = $1;  CHILD2 = $0;  Total Care Expenses = $1.

8.  Entered the the actual costs on all the care providers. Total Care Provided Expenses = $1000

9.  "Did you pay for any 2019 care in 2020?" --> No

10. Carryover from 2019 Used in 2020?" ---> 0

12. In "Your Child and Dependent Care Credit Summary" page, it shows the following:

   --------------------------------------------------------------------------------------------

      Eligible dependent care expenses:                                                       $1001

      Dependent care benefit from your W-2 or business schedules:    -$1000

      Expenses eligible for credit:                    $1

      Credit percentage:                                   XX%

       Your Child and Dependent Care Credit:   $0

      Dependent care benefits you must pay taxes on:   $1

      We've included $1 of your benefit in your taxable income.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

13. Checked on Form1040 Line1, it is labeled with 'DCB', amount = W2-box1 + $1.

(B)   If (A)'s answer is Yes, then why the eligible dependent care expenses is not $1000?  Why there is $1 assigned to CHILD1?   (context: a concern of whether TurboTax is providing the right methodology of calculating the tax outcome on the dependent care credit as taken into account of FSA)

(C)   If (A)'s answer is No, then what is the correct way of handling the dependent care credit section?

(D)   Since the child care credit is $0,  I once deleted CHILD1, CHILD2 dependent expense from the 'Dependent Care Section'.  I realized that in Form 1040, on Line1, it is noted with 'DCB', the amount is way  more than the amount of W-2 box1.  How come?

Thank you.

[Opus 17]

@Green Leaf 

Everything is generally correct except for the phantom $1.  If you transcribed everything correctly, the program is thinking both that care cost $1 more than your FSA reimbursement, but also that you were reimbursed $1 more than the care expense.  I would delete form 2441 and start over again and see what happens.  If you are entering dollars and cents, try entering only whole dollar amounts, it might be a rounding error.  

If it happens again, and you are using the online program, you may want to call to speak to someone who can look at the hidden program worksheets to see where this extra $1 is coming from.  If you are using the program installed on your own computer, you can switch to Forms mode and examine form 2441 directly.

As for question (D), you already indicated to Turbotax that you had a $1500 benefit and forfeited $500, that means you received $1000 from the FSA.  If you don't enter qualifying expenses, that reimbursement is added to your taxable income with the notation "DCB" to indicate why line 1 is more than your W-2 wages.