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January 20, 2022
Question

Is there a reason that my dependent care credit is showing with a max value of $1500, despite $8000 expenses?

  • January 20, 2022
  • 1 reply
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One spouse has earned income well below $125K and the other was a full-time student for 10 months of the year, with no earned income at all. With over $8000  in child care expenses, at the 2021 expanded 50% rate for the refundable credit, I would expect a credit of nearly $4000. I think it would be slightly lower because the student spouse was only a full time student for 10 months. However, the credit shows as $1250. I tested the portal by increasing the dropdown for "How many months of the year was X a full time student?" to "12" to see the max value, to see if that was the reason it is so much lower. However, the credit was then only $1500. Am I missing something here?

1 reply

DaveF1006
January 20, 2022

It depends. This is difficult to answer after not knowing all the specific details regarding your income and tax return. Please read this IRS publication and review the section between pages 10-14 How To Figure the Credit. 

 

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Critter-3
January 21, 2022

LOOK at the form 2441 line 5 and the instructions for line 5 ... and line 3 if you completed part III...