Child Care Expenses ....Child Care Credit

[nwtaxlady]

Client has Child Care Expenses of $9,000 and her employer reimburses her for $5,000. There is nothing in box 10 on W-2 for Dependent Care Benefits.
The only this on an explanation is Café 125 $5,000. I only know this because I asked her and she knew the answer!

So how should this be handled? Any dependent care credit for her for the $4,000 she paid?

[kamckinley]

Sounds like it wasn't reported correctly on her W-2, but yes, her qualifying expenses less the employer reimbursement are eligible for the credit.

[nwtaxlady]

Form 2441

So if I put in the $5,000 on page 2 of the Form 2441 then she doesn't get a credit. If I don't do that on page 2 and put only The $4000 on page 1, then she does get a credit.

It is all for 1 child.

Thanks.

[kamckinley]

I just plugged it into a sample tax return and you are correct. $4,000 shows up as qualifying expenses on page 1, part II, but on page 2 part III no dependent care credit is allowed. I should have done that before I responded, my apologies.

[taxea]

perhaps your client is confused as to what the 5K from employer covers. 125 is medical insurance not child care.

[Gary2]

perhaps your client is confused as to what the 5K from employer covers. 125 is medical insurance not child care.

125 is Cafeteria Plan. Both FSAs and DCBs are elements of cafeteria plans, though an FSA can no longer be that high.

That doesn't necessarily mean the client is correct.

[Gary2]

So if I put in the $5,000 on page 2 of the Form 2441 then she doesn't get a credit. If I don't do that on page 2 and put only The $4000 on page 1, then she does get a credit.

It is all for 1 child.

Is there a second child who could have qualified, but didn't actually use daycare (e.g. a ten year old in school)?