Child/Dependent care credits...

[AZ-Tax]

Upon reading the TTB pgs 11-1 thru 11-5, I could not locate if this tax credit will be reduced if the taxpayer is receiving:

EIC
Additional Child tax credit

The client has $4166 in Dependent Care benefits on their W-2.
Their total cost of Dependent care is $7000

AGI $1245 MFJ

My software is not giving this taxpayer any Dependent Care credits Ln 47/form 1040

[DaveinTexas]

Not a refundable credit

Upon reading the TTB pgs 11-1 thru 11-5, I could not locate if this tax credit will be reduced if the taxpayer is receiving:

EIC
Additional Child tax credit

The client has $4166 in Dependent Care benefits on their W-2.
Their total cost of Dependent care is $7000

AGI $1245 MFJ

My software is not giving this taxpayer any Dependent Care credits Ln 47/form 1040

The dependent care credit is not refundable, so if their tax is already $0; which I am assuming because you say their AGI is $1,245. The Dependent care credit can only reduce the tax to $0. Once the tax is $0, you receive no additional benefit/credit from Dependent Care expenses.

The EIC and Additional Child Tax Credits are refundable credits, producing a refund even if the tax is $0.

Hope that helps.

[DonPriebe]

The dependent care credit is not refundable, so if their tax is already $0; which I am assuming because you say their AGI is $1,245. The Dependent care credit can only reduce the tax to $0. Once the tax is $0, you receive no additional benefit/credit from Dependent Care expenses.

The EIC and Additional Child Tax Credits are refundable credits, producing a refund even if the tax is $0.

Be sure and also check the state return if you file one. In New York, for example, the Child Care Tax Credit is refundable, so you would get money back even though you owed no taxes.

[David1980]

The client has $4166 in Dependent Care benefits on their W-2.
Their total cost of Dependent care is $7000

AGI $1245 MFJ

My software is not giving this taxpayer any Dependent Care credits Ln 47/form 1040

The client is excluding $4166 from taxable income. Because the $4166 is more than the $3000 limit (see lines 31 - 33 of 2441) there is no credit.

So the client is being allowed to exclude the employer provided benefits instead of taking a credit.

(That and also what others said about tax already being 0, assuming you listed the correct AGI.)

[erchess]

Questions

Why did the couple not go to a free tax prep site during filing season and get their return done for free? Such low income people I thought could get for free all the tax help they need. Whereas if anything poor people need more medical care than others, it would seem to me that they need less help with tax and accounting issues in most cases. I also thought free tax help from well trained people was readily available..

If they are paying you a reasonable fee, where are they getting the money?

[MLINDER42]

Free Preparation

In this world you get what you pay for. I fix a lot of free returns every year.Like all things some of the preparers are fine others terrible lack of supervision biggest problem.Also in my area they do not do state returns.

[AZ-Tax]

I made typo on my original post...

The AGI should have read $12,450, it was the non refundable that thru me but regardless they have $0 taxable income