If your Child and Dependent Care Credit isn't calculating, there are several common reasons why the credit may not appear on your return. The good news is that most issues can be resolved by reviewing your entries and confirming that all required information has been entered correctly.
Did You Enter Expenses in Both Required Sections?
To calculate the credit, dependent care expenses must be entered in both the care provider section and the qualifying person section.
To review your entries:
- Select Federal.
- Select Deductions & Credits.
- Select Credits.
- Select Child and Dependent Care Credit (Form 2441).
- Enter your care provider information.
- Enter your qualifying person information and allocate the expenses to the appropriate individual.
- Save your entries and continue through the interview.
If expenses are entered for the provider but not assigned to a qualifying person, the credit will not calculate.
Do You Have a Qualifying Person?
The Child and Dependent Care Credit is only allowed for expenses paid for the care of a qualifying person, such as:
- Your qualifying child who was under age 13 when the care was provided.
- Your spouse who was physically or mentally incapable of self-care and lived with you for more than half the year.
- An individual who was physically or mentally incapable of self-care, lived with you for more than half the year, and either:
- Was your dependent, or
- Could have been your dependent except for certain IRS dependency limitations.
If the person receiving care doesn't meet one of these requirements, the expenses won't qualify for the credit.
Is the Qualifying Person's Information Correct?
Even a small data entry error can prevent the credit from calculating.
Double-check:
- Date of birth
- Social Security Number
- Disability status
- Relationship information
For example, if a child's birth date is entered incorrectly and shows the child was age 13 or older when the care was provided, the program may determine the child doesn't qualify for the credit.
Do You and Your Spouse Have Earned Income?
The expenses must have been paid so you (and your spouse, if filing jointly) could work or look for work.
Generally:
- Single filers must have earned income.
- Married Filing Jointly taxpayers must both have earned income.
Earned income may include:
- Wages reported on Form W-2
- Self-employment income
- Certain other compensation reported as earned income
If one spouse had no earned income, the credit usually isn't allowed unless that spouse:
- Was a full-time student, or
- Was physically or mentally incapable of self-care
Also verify that income was entered for the correct taxpayer. For example, if both W-2s were accidentally assigned to the same spouse, the program may show only one spouse with earned income and disallow the credit.
Are You Filing Married Filing Separately?
Taxpayers filing Married Filing Separately may qualify for the credit only if all of the following apply:
- You lived apart from your spouse during the last six months of the year.
- Your home was the qualifying person's main home for more than half the year.
- You paid more than half the cost of maintaining that home.
If these requirements aren't met, the credit generally isn't allowed.
Do You Have Tax Liability?
The Child and Dependent Care Credit is generally a nonrefundable credit.
This means the credit can reduce your tax liability but generally can't create a refund by itself. If your tax liability is already zero, you may not see a credit calculated on your return.
What Else Should I Check?
If your credit still isn't appearing:
- Verify that all care provider information has been entered.
- Confirm expenses are assigned to the correct qualifying person.
- Review the qualifying person's age and dependency information.
- Verify earned income entries for both spouses when filing jointly.
- Confirm your filing status is correct.
Once all information is entered correctly, the program will automatically determine your eligibility and calculate any Child and Dependent Care Credit you're allowed to claim on Form 2441.
Additional Information
For additional information pertaining to the Child and Dependent Care Expenses, please click here.