Why did child and dependent care credit not calculate in 2018?

[jacobchoe-cpa]

Client MFJ has same number of kids, income level stayed above $270k, dependent care expenses above $6000, and no other significant changes between 2018 and 2019. However, the credit of $1200 was not calculated for 2018 but is now showing up for 2019.

[George4Tacks]

What is (was) in box 10 of the W2 for each year?

[jacobchoe-cpa]

$5,000 for both years.

[Just-Lisa-Now-]

Compare the 2018 and 2019 printed 2441s to each other, what's different?

[jacobchoe-cpa]

Main difference is Lines 5, 6, and 9 are missing from 2018. I'm not sure what is driving those line calculations because I see amounts on those lines in 2019.

Also, I believe since the W2 has $5,000 in both years, they should only qualify for $200 credit. However, 2018 is calculating $0 while 2019 is calculating $1200. 

[Just-Lisa-Now-]

Did both spouses work and have earned income in 2018?   

[jacobchoe-cpa]

Yes, for both years.

[Just-Lisa-Now-]

They both had W2 income? or was someone self employed? They need to have a net profit from self employment, if they have a loss, it doesnt count as earned income.

[jacobchoe-cpa]

Both spouses each had W2 wages. In addition, 1 spouse received 1099 income. They also had rental income as well.

[Just-Lisa-Now-]

2018 has some kind of issue with the earned income of one of them...if Line 5 of the 2441 is blank that means someone didnt have any earned income.

Maybe all W2s got assigned to only 1 person by accident?  Did the self employed person have a loss?

[jacobchoe-cpa]

You're right. Both W2's were classified under one spouse in 2018. I updated 2018 and the credit adjusted to $200 which is what I expected.

However, 2019 is showing $1200 for the credit. I believe it should be $200 for 2019 as well but this time the W2's are correctly applied to 1 per spouse.

[Just-Lisa-Now- · Accepted solution]

You'll just have to follow the math down the 2441 and see how its computing the 1200   

You're sure the DCB in Box 10 was included on the W2?

[jacobchoe-cpa]

Thank you for your help. I now see that there was an override entry in 2019 that was somehow making the return eligible for the $1200. I removed it and it now properly calculates at $200. 

Thanks for all your help and the quick response times.