Dependent Care Exclusion - MFS
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Level 1

Dependent Care Exclusion - MFS

My wife and I live together and file separately. We both work and have $2,500 withheld from our pay in a dependent care savings account. According to the 2019 form 2441 instructions we do not qualify for the child and dependent care credit as a result of filing separately, but we do qualify for a $2,500 exclusion since we meet items 2 through 5 on page 2 of the instructions ("However, you generally can take the exclusion if you meet items 2 through 5".

 

I am unable to figure out how to get TurboTax to populate form 2441 correctly. It will not populate my daughter's information as a qualifying person in line 2 unless I indicate that I am claiming her as a dependent, which I do not need to do in order to exclude the $2,500. Since line 2 is not populated line 16 is $0 instead of $2,500, and I end up with the dependent care benefits being taxable on line 26.

 

I spoke with a representative from turbotax who incorrectly said I do not qualify for the exclusion.

 

Please advise how I can get turbotax to populate form 2441 correctly for my situation. Thank you!

3 Replies
Employee Tax Expert

Dependent Care Exclusion - MFS

You are correct, you can qualify if your meet the qualifications outlined in the instructions for form 2441 even though you are filing married-separate.

 

I got it to work by indicating that the taxpayer was married but filing separately and did not live with the spouse any time between July 1, 2019 and December 31, 2019. That is one of the stipulations in the regulations I believe.

 

I did indicate that the other parent was claiming the child as a dependent and I still got the child tax credit.

 

So, I think the issue is that you are living together, that is what is disallowing the credit.

 

 

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Level 1

Dependent Care Exclusion - MFS

Hi @ThomasM125 -

 

Thank you for your response! Unfortunately, this is not the situation I'm in. Your methodology results in the box at the top of form 2441 being checked, which is not correct for me since I do live with my wife and therefore do not qualify for the child and dependent care credit. I am attempting to get the $2,500 exclusion, not the credit.

 

On page 2 of the form 2441 instructions it says "If you don't meet all the requirements to be treated as unmarried, you generally can't take the credit. However, you generally can take the exclusion if you meet items 2 through 5." This is the provision that allows me to exclude the $2,500. There is further detail on the instructions for line 19 where your entry depends on whether you are considered unmarried for the credit (which I am not), so for my situation my spouse's earned income should be populated on line 19 and line 21 should be $2,500.

 

For what it's worth, I used H&R block software last year and they were able to correctly handle this situation. I'm disappointed that turbotax incorrectly calculates my taxes and even after being informed of the error in the software Intuit is taking no action to correct it.

 

Is there an option to get a refund since turbotax is unable to prepare my filing correctly? It doesn't seem worth the cost if I end up having to do the whole thing manually anyway. I guess I'll just purchase H&R block again this year.

Expert Alumni

Dependent Care Exclusion - MFS

To claim the Exclusion in TurboTax

  • From Deductions and Credits
  • Update next to Child and Dependent Care Credit
  • On the landing page select Yes
  • On the Tell Us More About Your Family select the appropriate choices from the choices
  • Hit Continue
  • You will then be prompted to enter your spouse's earned income.
  • Hit Continue and go through the provider screens.
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