Common questions for Form 2441 Child and Dependent Care Expenses in Lacerte

Form 2441 and the dependent care credit may not generate if:

The Taxpayer/Spouse has no taxable earned income. The credit is a nonrefundable credit therefore if they have no tax liability they do not qualify for the dependent credit.

• Earned income for the Form 2441 includes:
  • Wages in box 1 of the Form W-2
  • Schedule C income
  • Schedule F income
  • Partnership K-1 net earnings from self-employment
  • S-Corporate K-1 net earnings from self-employment
  • Disability Pensions

If the Taxpayer/Spouse has a W-2, box 10 with an amount greater than the $3,000. You can verify the calculation on 2441 page 2 Part III.  If the Taxpayer/Spouse has a tax liability and the W-2, box 10 is less than $3,000:

1. Go to Screen 2, Dependent Information.
2. Verify there is a qualifying dependent entered:
   • Dependent has a valid SSN
   • Dependent has a Date of Birth (a qualifying child must be under age 13.)
3. Go to Screen 33, Child and Dependent Care Expenses.
4. Select Persons & Expenses Qualifying for Dependent Care Cr. from the left hand navigation panel.
5. Verify the Dependents Name, Date of birth, and Social security number match the Dependent from Screen 2.
6. Enter the Qualified dependent care expense incurred and paid in 20XX (MANDATORY).
7. Click on Persons or Organization Providing Dependent Care from the top left navigation panel (Screen 33.2).
8. Verify the Person or Organization information is entered and complete.
9. Enter the Total amount paid to care provider in 20XX for all dependents.

Dependent Care Benefits reported on the W-2, box 10 should be entered in Screen 10, Wages, in the field, (10) Dependent care benefits (code 12). To enter Dependent Care Benefits not reported on W-2:

1. Go to Screen 33, Dependent Care Credit (2441).
2. Select General Information in the Dependent box on the left side of the screen.
3. Enter the appropriate amount in the appropriate field under Dependent Care Benefits.
4. Enter other applicable information as needed.

The total amount of dependent care benefits will show on page 2 of the Form 2441, Part III, Line 12.  Part III of Form 2441 is used for computing the taxable benefits.  The taxable amount of benefits will show on Form 2441, Line 26 and will also show in the space to the left of Line 7 of the 1040 with the initials "DCB". 

Dependent Care Benefits (DCB) from a sole proprietorship or partnership should also be entered in the input screens for each respective business.  For example, DCB from a Partnership K-1, box 13 would be entered in both Dependent Care Credit screen 33 and Passthrough K-1 screen 20.1. 

When a taxpayer is filing MFS and has dependent care expenses, there are certain requirements that must be met to be able to take the credit. The  taxpayer would be "treated as unmarried."

To exclude the dependent care benefits from the return:

1. Go to Screen 33, Dependent Care Credit (2441)
2. Click on Persons & Expenses Qualifying for Dependent Care Cr. from the left navigation panel
3. Click on the General Information button
4. Enter 1 in, 1 = married filing separate and treated as unmarried

 
See the Form 2441 instructions for more information:

"Married Persons Filing Separately

Generally, married persons must file a joint return to claim the credit. If your filing status is married filing separately and all of the following apply, you are considered unmarried for purposes of claiming the credit on Form 2441.

• You lived apart from your spouse during the last 6 months of [current tax year].
• Your home was the qualifying person's main home for more than half of [current tax year].
• You paid more than half of the cost of keeping up that home for [current tax year].

If you meet all the requirements to be treated as unmarried and meet items 2 through 5 listed earlier, you can take the credit or the exclusion. If you do not meet all the requirements to be treated as unmarried, you cannot take the credit. However, you can take the exclusion if you meet items 2 through 5."