Form 2441 line 4 for full-time student

[dar24]

I am using TurboTax Deluxe Desktop edition to complete my taxes. I believe TurboTax is populating Form 2441 incorrectly based on the information I provide it.

I initially used the EasyStep interface to calculate the Child and Dependent Care Credit and was surprised to see that my calculated tax credit is 0. Digging into Form 2441, I believe TurboTax generates this form erroneously.

I was a full-time student for all 12 months of 2023 with zero earned income while my spouse has W2 income. Box B on Form 2441 is checked to indicate that I am entering in deemed income of $500/month for my earned income calculation.

Scrolling down to the box below line 4, Box A correctly indicates 12 months and Box B correctly indicates $6000 under "Taxpayer" column. However, line 4 "Enter your earned income" is populated with 0 (taken from the earned income worksheet), instead of the $6000 calculated in the box below. Line 4 is a calculated number which means that I can't seem to edit it manually.

The implication is that line 6 takes the smallest of line 3 ($6000 in eligible childcare expenses), line 4 (my earned income, which should be $6000 but TurboTax is using 0), and line 5 (my spouse's W2 income, which is > $6000), and then multiplies it by the decimal percentage on line 8 (0.2 in my case). So, my tax credit is calculated to be 0*0.2=0, instead of 6000*0.2 = $1200.

Can anyone see an error in how I am using TurboTax, or is this truly an error with TurboTax software itself? Appreciate any and all help.

[dar24]

I think I figured out what is going on here.

In EasyStep, TurboTax asks you "Did you work while you were a student during those 12 months?". I had clicked "Yes", because (in my case) I was technically working but paid through fellowships (reported on 1098-T) and not W-2 income. Since I received more than $500/month in fellowship payments, I selected "Yes" for the subsequent TurboTax prompt. Then, on the next page, "We Need Some More Info to Calculate Your Credit", I entered in 12*500 = 6000. Note that TurboTax, under Step 2, says "We'll then take ***'s income of zero and update the qualifying income used to calculate this credit".

If you complete EasyStep this way, then Line 4 on Form 2441 ignores the box to estimate deemed income from being a full-time student and instead pulls directly from the Earned Income worksheet (which is zero in my case). 

I fixed the problem for my tax return by instead selecting "No" for the EasyStep question "Did you work while you were a student during those 12 months?". Now, form 2441 enters $6000 on line 4 and my tax credit is calculated correctly.