Why is my Massachusetts Child Care Deduction capped at $4600? I spent more than this, and I see that the max deduction for 2 kids should be $9600

[BillM223]

"Note: You cannot claim this deduction if married filing a separate U.S. Form 1040. If you are filing a joint U.S. Form 1040 return but are married filing separately for Massachusetts purposes, either spouse may claim the deduction for expenses he or she incurred, but their combined deduction cannot exceed $4,800 for one qualifying individual or $9,600 for two or more qualifying individuals."

Are you filing married separate?

Read the instructions at the Massachusetts website for line 12 on page 11 to see if any of the situations listed applies to you.

[wolverineeast]

Thanks! but no, I'm filing as married joint return...so I expected a $9600 deduction

[KurtL1]

When @BillM223 referred to two or more qualifying individuals he was not referring to you and your wife but two or more of your children that qualified for the deduction.

[wolverineeast]

Thanks! But yes, I am filing with 2 children in daycare. I don't understand why Turbotax puts the deduction at $4600. All the instructions say it should be $9600 for me. Is this a bug in the software?

[KathrynG3]

No, there is not a bug.

Please revisit the listed child and dependent care section of your return. If the expenses are not qualified, they cannot be included.

To return to this area of your return, follow these steps.

• From the left menu, select Federal
• Deductions & Credits
• All tax breaks scroll down to You and Your Family click Show More
• Child and Dependent Care Credit click Revisit

You cannot edit this in the state section. But you can see it listed for the full Massachusetts amount by following these steps:

• From the left menu, select State
• Continue
• Massachusetts click Edit
• You should now be at the summary page for Massachusetts. The Child and Dependent Care Credit is in the Adjustments section. By revisiting this section, about 2/3 through the questions, you will see the amount that will be reported for the Massachusetts Child and Dependent Care Credit in the larger amount allowed for the state for qualified expenses.

Qualified expenses are care expenses paid to a qualified provider and cannot include amounts deducted from your wages.

Click here for more information about What can be included as a Child and Dependent Care Expense.

2019 IRS Publication 503 Child and Dependent Care Expenses

2019 Form 2441 Child and Dependent Care Expenses Instructions

[wolverineeast]

Thanks so much @KathrynG3 

But I still I only see I am eligible for $4600 (see picture below), even though I have listed much, much more in the federal return.

Does it matter if I list the daycare as tax exempt? I've tried both ways, but it didn't seem to change anything. I also have 2 different daycare providers listed in my federal return

[KathrynG3]

You're welcome! 

No, it does not matter if the daycare is tax-exempt on the federal. 

• For you to be expecting $9,600, that would mean you have care expenses for more than one child. Please verify both(or all of the) children are listed for the child and dependent care credit since Massachusetts seems to be limiting the credit as if there was only one child with expenses.
   
• Since the issue still persists, I suggest you delete the state completely and re-add it. To delete the state and re-add it, follow these steps:

  • To delete and re-add the state: 

    • From the left menu select State>
    • Continue>next to your state, click the Trash Can icon and follow through the rest of the questions ending with Done
    • Click Add Another State>Your state>and go through the interview again.

Here is a link to the Mass.gov Child and Dependent Related Deductions.

[wolverineeast]

Thanks.

I did that twice now (delete the state and start over). It still says I qualify for a deduction of only $4600. 

I confirm that I have 2 kids listed with childcare expenses in the federal section. 

Not sure what to do next!

[KurtL1]

If we could look at your return we could help you with your problem on the child care

You can have an agent look at your return to answer your question with a Offline Review.
 

You can also do a  Live Review where you can talk to a Tax Expert.

To talk to a Tax Expert or have a Offline Review  see What is TurboTax Live? - Community.

[wolverineeast]

thanks, @KurtL1 . do i have to pay extra for turbotax live for this review of my 1 specific question?

[KathrynG3]

Yes,  you would have to pay extra for TurboTax Live.

You have confirmed your filing status of married filing jointly and that you have two children.

If the expenses were paid from a pre-tax fund, all pre-tax dollars are not eligible to be included in this credit. The IRS would consider that a "double-dip," since you did not have to pay tax on the funds allocated to daycare. Also, if your spouse did not work, your credit may be limited. Regarding Massachusetts, however, I would not expect it to be limited if you were receiving the full $6,000. 

This is another resource for you, 2019 IRS Tax Topic 602, Child and Dependent Care. 

[wolverineeast]

@KathrynG3 and @KurtL1 

I appreciate your help. I'm pretty sure this must be an error in the Turbotax software. I looked up the instructions for Massachusetts form 1, and it says for 1 child it would $4800 and 2 children $9600. I have no idea why Turbotax is calculating a $4600 deduction.

Since I believe it is an error, I would like to contact customer service to look into this. Can you direct me on how to do this. I have triple checked that I have entered all the information in the federal forms correctly regarding daycare expenses. 

Thank you

[DaveF1006]

At this point you may wish to contact a specialist that can work through that section of the return with you. The specialists can look at your return on their screen to find out exactly how the blended tax rate was determined and the specific circumstances surrounding it. 

[Bees]

How old are your children? Does Mass only give deduction for under 13? The rule is usually if they turn a certain age during year they are not eligible http://children.massbudget.org/tax-break-child-and-dependent-care-costs?source=commonthread

 Also check the personal information on the federal section where you added their names and go through those questions again. If you made a mistake on info, like saying they provided more then half their own support they may not be showing as a dependent