Question: How should child care expenses be entered if the party received dependent care benefits?
Follow these steps to make sure that the program is giving an accurate tax estimate in this situation.
For gross wages, subtract the amount of dependent care benefits. For example, if gross wages are $100,000 and dependent care benefits $5,000, enter $95,000 as gross annual wages.
If there are two or more children in daycare, enter as child care expenses (a) the smaller of $6,000 or total annual daycare expenses minus (b) the annual dependent care benefits. The result is often $1,000 per year, since annual daycare expenses are typically more than $6,000 and dependent care benefits are typically $5,000 per year (the maximum). You can easily convert the annual figure to a monthly or weekly figure by clicking in the child care expense field, clicking the # sign or calculator symbol, and entering the annual amount. The monthly amount for $1,000 is $83.
If there is one child in daycare, enter as child care expenses (a) the smaller of $3,000 or total annual daycare expenses minus (b) the annual dependent care benefit. This amount is often $0 since dependent care benefits and expenses often exceed $3,000.
After entering the amount in Step 2 or 3, go to View / Edit Taxes and make a note of any child care credit amount.
Go back to the data entry screen and enter the full amount of child care expenses.
Go to View/Edit Taxes and override the child care credit with the amount noted in step 4.