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How to resolve diagnostic ref. 717 in Lacerte - Earned income requirement not met for dependent care credit

SOLVEDby IntuitLacerte Tax15Updated July 14, 2022

When preparing a 1040 Individual return, you may get the following diagnostic:

"Earned income requirement not met for dependent care credit.  If spouse is disabled or a full-time student, an entry is required in either "Number of months disabled or full-time student" (Screen 33, codes 12 or 62) and/or "Earned income [A]" (Screen 33, codes 4 or 54). (ref. #717)"

The above diagnostic generates if the Form 2441 does not calculate a credit even though entries for any dependent care expenses have been made in Screen 33, Dependent Care Credit (2441).

Per the Form 2441, if married filing jointly, the calculation for Dependent Care Credit continues only if line 5 has an amount.  Line 5 is where Lacerte prints the spouse's earned income, or the allowance provided if the spouse is disabled or a full-time student.

The informational diagnostic is present to inform you that if the conditions are applicable to the return, go to Screen 33.1, Child and Dependent Care Expenses (2441) and enter the number of months the spouse was disabled or a full-time student in the field Number of months disabled or full-time student.  An entry in this field will trigger Lacerte's calculation of the allowance provided for spouse's who are disabled or full-time students.

Per the IRS instructions for Form 2441 instructions:

"For each month or part of a month your spouse was a student or was disabled, he or she is considered to have worked and earned income.  His or her earned income for each month is considered to be at least $250 ($500 if more than one qualifying person was cared for in 2013). Enter that amount on line 5."

If necessary, enter an adjustment for spouse's earned income in Earned income [A], also in Screen 33.1, Child and Dependent Care Expenses (2441).

If this situation does not apply, you can ignore the diagnostic.

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