Child and Dependent Care Credit Error

Forum|Forum|3 years ago
February 12, 2023
4 replies
0 views

I contributed $5,000 to my dependent care FSA for 2022 and spent $12,498.00 on child day care. Turbo tax is telling me I do not quality for the child and dependent care credit. Shouldn't I be able to deduct a percentage of the remaining $7,498.00?

-My wife and I are both earning income

-We are married filing jointly

-We claimed our 1 year old as our dependent

-We make <$400,000

Best answer by rjs

For one child, the maximum amount of child care expenses that you can claim for the credit is $3,000. That maximum is reduced by the amount that you used from your FSA. The $5,000 from the FSA is subtracted from the $3,000 maximum. The result is less than zero, so you have already exceeded the $3,000 maximum for one child. You cannot use any additional expenses for the credit.

Bsch4477

Employee

Once you have used your $5,000 FSA for child care expenses you can’t use the same expenses for the child care credit. You already received the tax free benefit from the FSA so you can’t double dip.

dennehrmAuthor

Yes I am unable to double dip on the $5,000 from my FSA, but what about the additional $7,498?

rjsAnswer

Employee

VolvoGirl

Employee

Does it say why you don't qualify? Is it asking if you are disabled or a full time student?

Have you entered all your income yet? Make sure you are each showing income. Check each W2, should be assigned to the right spouse. If you have self employment income you need to have a profit to qualify.

See the Child Care Credit for qualifications

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

dennehrmAuthor

It gives me no information on why I do not qualify. It has not asked me any questions about being disabled or a full time student.

All income has been entered.
All W2s are correctly assigned.
No self employment income.

njpardy

I am having the same issue it appears to think that my employer reimbursed us for the childcare. But we were the ones putting the money into the account out of our paycheck pre-tax. There seems to be an error in the program that it deducts the FSA from the tax credit which appears to be wrong. For example we paid $10,800 for childcare, we have 2 children. We put $5000 in an FSA account, the program shows that we had $5800 in out of pocket expenses. ($10800 - $5000). But when you get to the screen it is showing our total eligible Dependent care credit is $6000, dependent care benefit on W2 is -5000 to our total eligible credit is $1000. This is incorrect it should not be subtracted Per the IRS guidelines and it did not occur in prior years.

Bsch4477

Employee

As you posted, the $5000. you put in was pretax so you already received a tax benefit. You can’t use the same $5000 again as an expense.

Montana Mom

Having the same issue. For some reason employer reported they had 5k in contributions in box 10 on w2, actually increased my taxable income showing as income. Then now in the dependent care section it is showing I am not eligible for the dependent care credit. We spend $10,120 total on childcare for one dependent in 2022 and used 5k from our own self paid contributions into a dependent care account. Just want to be able to get the credit for the remaining $5,120.

DawnC

Employee

If you only had one child, you cannot take the credit. The credit is $3K of expenses for one child or $6K for two children. You are correct that when you enter the Box 10 amount ($5K), your tax goes up, because you have not entered the provider information yet. After you enter 5K worth of qualified expenses, that tax is removed. You got $5K of tax-free income from your FSA, so there is no credit left to take for the dependent care credit. You actually got more of a tax break (a $5K deduction) whereas if you did not have that, you would have been able to take a credit for only $3K Dependent Care Credit. @Montana Mom

Key Takeaways from the credit--

If you paid someone to care for a child who was under age 13 when the care was provided and whom you claim as a dependent on your tax return, you may qualify for the Child and Dependent Care Credit.
You also may qualify for the credit if you paid someone to care for your spouse or any other person claimed as a dependent on your return, if that person can't take care of himself or herself and has lived in your home at least half the year.
To claim the credit, you (and your spouse, if you're married) must have income earned from a job and you must have paid for the care so that you could work or look for work.
You can claim from 20% to 35% of your care expenses up to a maximum of $3,000 for one person, or $6,000 for two or more people (tax year 2023).

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Critter-3

FYI ... ignore the Refund-O-Meter until you are completely done with the return. The amount will fluctuate as you complete the interview process and is ONLY correct when you are filled in all the screens and have corrected all the errors in the REVIEW tab.