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Fairness doesn't usually enter into laws made by Congress. I suppose they had a good reason to deny the dependent care credit to MFS, but you would have to ask them (probably back in 1986). You can use a tax-free dependent care FSA to pay for care expenses even when married filing separately.
CHILD AND DEPENDENT CARE CREDIT . You will not get the childcare credit until (unless) you enter income earned from working. The credit does not work unless you enter your income first. If you are filing a joint return you must show income for both spouses, or show that one or both of you was a student or disabled.
Once you have used your $5,000 FSA for childcare expenses you can’t use the same expenses for the childcare credit that’s why the eligible credit amount for child and dependent care is $1,000. You already received the tax-free benefit from the FSA so you can’t double dip.
The Child and Dependent Care Credit is worth as much as 35% of your qualified expenses, up to $3,000, (for one qualifying person), and $6,000 (for two or more qualifying persons). Your percentage depends on your AGI, with the higher percentages applying to lower incomes and vice-versa.
The way the law is phrased, you can apply up to $3,000 in child care expenses to the Child and Dependent Care Credit, per child, with a maximum of two children. One child, $3,000 max; 2 or more children, $6,000 max. If you have a dependent care FSA, then the money for those expenses is taken from the FSA first.
It depends. One of the requirements for claiming the child and dependent care expense credit is that the expenses have to be work related. To be work related, the expenses must be incurred so that you and your spouse are able to work or look for work.
- click Edit/Add for the Dependent Care Credit deduction - answer Yes for the question "Did you pay for child and dependent care in 2021?" - answer Yes for the "principal place of residence in the U.S." question - answer "None of the above" for both my spouse and I in the Tell Us More screen . I am bounced back out to the main Deductions ...
When I get to Federal Review, it says "your Child and Dependent Care Credit info is incomplete." So I click to go back and complete that section, which asks "do you want to work on the child and dependent care credit now." I select "yes" and on the next screen I confirm that neither I nor my spouse ...
The child and dependent care credit is generally worth 20% to 35% of up to $3,000 (for one qualifying dependent) or $6,000 (for two or more qualifying dependents). This means that the maximum child and dependent care credit is $1,050 for one dependent or $2,100 for two or more dependents.
Yes. But, if you claim the dependent care credit, she will have to claim the money as income and pay social security and medicare tax (15.3%), as well as income tax. If she babysat in your home, instead of hers, she is classified as a household employee. Grandparents (parent of the taxpayer) are exempt from the "Nanny tax".