Dependent Care Credit and Student with Income Error

[lynch730]

I am working through the "Dependent Care Credit" section of turbotax online for 2022 taxes. I am filing as married filing jointly, and both my spouse and I make more than our work-related expenses for childcare. I am a full time student with income (teaching assistant stipend), and she is not a student.

According to IRS instructions for Form 2441, "For each month or part of a month you were a student or disabled, your earned income is considered to be at least $250... If you also worked during that month, enter the higher of $250 (or $500) or your actual earned income for that month."

Even though I've entered my W2 into Turbotax which includes income above the $250 each month, the software appears to limit the credit amount ($600) to the minimum $250/month (20% of $250*12 months) instead of using my actual income. There does not appear to be an option for correcting this.

Am I missing something, or is this a bug?

[xmasbaby0]

CHILD AND DEPENDENT CARE CREDIT

You will not get the childcare credit until (unless) you enter income earned from working.   The credit does not work unless you enter your income first.   If you are filing a joint return you must show income for both spouses, or show that one or both of you was a student or disabled.   If you have self-employment income and show a loss you will not get the childcare credit.  You will not get the credit if you are filing married filing separately.  

If you have entered all of your income and you have entered your dependent(s) then work on the childcare credit by entering the Tax ID or Social Security number of your childcare provider and enter the amount you paid for the childcare.

One of the most common mistakes that messes up the childcare credit for people is listing all of the earned income under only one name on a joint return.  Make very sure that your incomes are listed under each of your names.  It’s pretty easy to check.  Go to the Income section, and click “update” on Wages and Salary.  That will take you to the W-2 Summary.  Do you see income listed under both of your names? 

 The person receiving the care had to be 12 or under or qualified as mentally or physically disabled. To claim the childcare credit you need to be filing as Head of Household or Married Filing Jointly. (NOT married filing separately)

 If your child was born in 2022 make sure you say the child lived with you all year. The credit is a percentage of your expenses based on your AGI (the higher the income, the lower the percentage)  You must provide the Social Security number for each child you are claiming, and the Social Security number or Tax ID for each care provider. 

In the case of divorced or never-married parents—only the custodial parent can use the childcare credit.

And remember that the childcare credit is a NON-refundable credit.  It can reduce your tax owed down to zero, but it is not added to your refund.

https://ttlc.intuit.com/questions/1900643-what-is-the-child-and-dependent-care-credit

[Critter-3]

Simple answer is just ignore the student stuff and the daycare section if both of you have enough income reported on the return. That student stuff is only if you did not work.

[lynch730]

I'm not sure exactly what sections you're referring to . The "Child and Dependent Care Credit" has no sections related to student information that I can see. It just asks about dependent care (daycare) which I filled out.

[lynch730]

Yes, both my wife and I have W2's listed under income. I double checked both names are correctly shown. My child is included in the dependents section, and the childcare expenses were filled out with the Tax ID of the daycare. 

I can't see how Turbotax fills out my Form 2441 yet, but it appears as though that box B is checked ("If you or your spouse was a student or was disabled... check this box"), despite the W2 on file. Nowhere in the C&DC credit section online gives an option related to student making income.