Turbo tax blocks Child and Dependent Care credit and say "not eligible". Both spouses have income (W2 +dependent FSA and 1099K). How do I manually enter daycare expenses?

Forum|Forum|11 months ago
April 10, 2025
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Turbo tax blocks Child and Dependent Care credit and say "not eligible". Both spouses have income (W2 +dependent FSA and 1099K respectively) and we have $20k + of expenses for daycare. How do I manually enter daycare expenses? They go well-beyond what is covered under the FSA, and right now Turbotax does not offer the option to enter them.

VolvoGirl

Is your child under 13? 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.

KeshaH

Whether you'd qualify for the child and dependent care credit on top of the dependent care benefits received would dependent on the number of children in care.

If you only one child in care, you wouldn't qualify for the credit. The maximum amount of work-related expenses you can use to calculate the credit is $3,000. The $3,000 must be reduced by the amount of tax-free dependent care benefits received. In this case, if you received the max dependent care benefits of $5,000, there'd be no credit since the tax-free benefits exceed your work-related expenses.

If there's more than one child in care, the maximum amount of work-related expenses is $6,000. This would give you $1,000 worth of expenses that you can use to calculate the credit.

If your maximum work-related expense exceeds your dependent care benefit and TurboTax is still not calculating the credit, make sure that you've assigned income to each spouse in the W-2 section.

yannschinaziAuthor

So, are you saying that even if I spent over $30,000 in daycare expenses, because I have $5000 in FSA (and still $25,00 of expenses) I cannot be eligible for the child credit for the rest of the expenses?

CatinaT1

Where is the income reported from the 1099-K? Is there a related Schedule C for self-employment? Is there a profit reported on the Schedule C? She would need to have earned income to qualify.

If you qualify for the Child and Dependent Care Credit and had $5000 in an FSA account, there would only be $1000 of expense left to use toward the credit. The credit only allows for $6000 worth of expense used for the credit when you have 2 or more children. $5000 was already tax free due to the FSA, so that only leaves $1000 to use for the credit.

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