Why is Turbotax telling me that we dont qualify for Child and Dependent Care, when we have a substantial bill this year? What would cause us to be disqualified?

[xmasbaby0]

Have you entered your income earned from working yet?   If you have not entered income from a W-2 or from self-employment showing a profit the forms for the childcare credit will not populate.  Is your child younger than 13?   Are you filing a joint return?   You cannot get the childcare credit if you file married filing separately.

[Vanessa A]

If TurboTax is telling you you do not qualify there could be a few reasons.

1.  Your child's information is incorrect (missing information) Go back and double check the personal info section to be sure you accurately answered all of the questions regarding your children and yourself.  
2. You entered income for one of you but not both of you.  Double check to be sure that when you entered your income, you selected that it belonged to the right person.
3. You did not enter your income yet.
4. Your income is too high. If your income for the year was greater than $438,000 for married filing jointly, you would not qualify for the Dependent Care Credit.

(Edited 2/24/2022 @ 8:27AM PST)

[shivani128]

1. Can confirm, all dependent information entered- Turbotax gave this message "Good news! XYZ qualifies as your dependent."

2./3. Can confirm income entered for both of us - Married filing Jointly.

4. Income far lower than the $438,000 threshold mentioned below.

and yet I get this message-"It turns out you don't qualify for this credit".

I'm really bummed!

[xmasbaby0]

You have to make sure you entered income under each spouse's name on the income screens.  If you entered it all under only one of your names it messes you up and you cannot get the childcare credit.

[shivani128]

An update - I think this is a bug in Turbo tax's browser. I deleted my dependent to re-add them. As soon as I did that, I saw that my refund reduce considerably. When i added my dependent back, the refund went back to what it was before the deletion. This tells me that the deduction may be getting applied, but browser takes me to the "You don't qualify for the Child and Dependent Care" deduction, regardless.

Either that, or there is something that I cant explain. 

In any case, turbtox product managers should review this issue.

[RaifH · Accepted solution]

By deleting the child and adding them back, the movement on the refund was probably due to the Child Tax Credit, which is different than the Child and Dependent Care Credit.

In addition to what the other posters have said about both of you needing earned income and your child must be under 13 to receive the Child and Dependent Care Credit, did either you or your spouse receive Dependent Care Benefits in Box 10 of your W-2? If you did, this can reduce or eliminate the Child and Dependent Care Credit for which you would be eligible. 

An easy way to see if you are currently getting the Child and Dependent Care Credit is to preview your Form 1040:

1. Open or continue your return.
2. Select Tax Tools in the left menu (if you don't see this, select the menu icon in the upper-left corner).
3. With the Tax Tools menu open, you can then view your 1040 form: Select Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu
4. Scroll down until you see Schedule 3 Line 13g Credit for child and dependent care expenses. If you received anything it would also be on Form 1040, Line 31. If you are not currently receiving the credit, you may not have a Schedule 3 on your return in which case Line 31 of Form 1040 will be blank. 

[mrcargirl]

This may not be the case for you, but if you have two or more children that qualify but all of the expenses were paid for one child, you must add the second (or third...) child and say $0 for expenses.

[Bosscandy13]

I have two children 1 is 13 the other is 8. I have income and have qualified for dependent care every year. I know only my 8 year old qualifies for the credit so why is turbo tax not adding the credit?

[CatinaT1]

It's possible you don't owe any more tax, and that's why you don't qualify. The child and dependent care tax credit is nonrefundable, which means the credit cannot reduce your tax any further if it is already zero.

Make sure you meet all the qualifiers for the credit.

To qualify for the Child and Dependent Care Credit, ALL of the following must be true: 

1. Your dependent is listed (and is either under age 13 or is marked as disabled). 
2. You have earned income. 
3. Your spouse (if filing jointly) also has earned income, is a full-time student, or is disabled. 
4. Your filing status is not Married Filing Separately. 
5. You have provided the caregiver's social security or tax ID number. 
6. You must owe tax. 

  

The child and dependent care tax credit is nonrefundable, which means the credit cannot reduce your tax any further if it is already zero.  So it's possible you don't owe any more tax, and that's why you don't qualify!  

  

You can check to be sure that is what is happening by viewing your Tax Summary.   Here is how to do that: 

  

Log in to your tax return at TurboTax.com. 

1. Click on Tax Tools on the left side of the screen (you may need to click on Continue in the center first). 
2. Click on Tools. 
3. In the box that pops up in the center, click on View Tax Summary. 
4. If you see a 0 for Total Tax, then that is the reason you don't qualify for this particular credit.

[Critter-3]

On the 2021 tax year ONLY the child care credit was huge and fully refundable but this year (2022) the credit is back to being limited to your tax liability.  

[Bosscandy13]

Thank you for your help, it still doesn’t make sense to me. I’ve never owed any taxes, always gotten a nice refund and have been claiming dependent care for the past 13 years. Maybe I need to take a tax class to better understand this situation. This is the first time I’ve been excluded from the dependent care credit so I’m a bit worried I’ll probably just got to a professional instead of trying to file myself.

[Hal_Al]

Review form 2441 for the calculations. 

[xmasbaby0]

@ Bosscandy13  Remember that the childcare credit is NON-refundable for 2022.  It can only reduce your tax owed.

[Critter-3]

@ Bosscandy13  

Just because you get a refund doesn't mean you did not have a tax liability on the return ... it just means that between what you had withheld and the credits you overpaid and thus got a refund.  Form 2441 can only reduce your tax liability to zero .... it cannot add to your refund as it is non refundable in 2022.  Review the entire return to see what is happening.

And to be able to use the credit at all you (and your spouse if married) must have taxable earned income ... so back to the original answer ... did you enter in the income yet ? 

You can view your Form 1040 and Schedules 1, 2, and 3 before you pay the TurboTax fees. But to see any other forms you have to first pay the TurboTax fees.

Paying the fees does not file your tax return. Even after you pay, you still have the opportunity to review your entire tax return, and make sure everything is correct, before you actually file it.

See the following FAQ for instructions to view your return in TurboTax Online. It has instructions to see your entire tax return, or just Form 1040 and Schedules 1, 2, and 3. "Preview my 1040" will also show you Schedules 1, 2, and 3.

How do I preview my TurboTax Online return before filing?