Dependent Care Benefits and Married Filing Separate

[JOFI]

I understand this issue has been addressed in this forum previously, but I frankly do no understand the solution that has been proffered.

For those of us who are a bit slow, how do you manipulate the forms in Proseries so that a spouse filing separately can still exclude up to $2,500 of Dependent Care Benefits from taxable income even though he/she cannot claim the Child and Dependent Care credit?

Thanks in advance.

[Terry53029]

You just fill out form 2441, and in part 3 just after line 18 is a married filing separate worksheet. You check the box that applies to your client

[JOFI]

Thanks.  So I need to check Box A certifying the taxpayer is considered unmarried under the Special Rule for Married Filing Separate Returns.  That does the trick in terms of allowing the exclusion of DCB benefits from taxable income.

I recognize this is a crude workaround, but it technically is not correct.  The IRS has specific requirements for being "considered unmarried" here, none of which apply to my typical client filing Married Separate returns.  You also need to be careful to not include any child care expenses that exceed the DCB amount and hence make you eligible for the Child and Dependent Care credit -- as the rules are clear that Married Filing Separate taxpayers cannot claim this credit except under very specific circumstances.

[Terry53029]

Here are the rules if you are MFS. link: https://www.irs.gov/pub/irs-pdf/i2441.pdf

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 2022.
• Your home was the qualifying person's main home for
more than half of 2022.
• You paid more than half of the cost of keeping up that
home for 2022.

[JOFI]

Thanks.  The IRS rules are perfectly clear to me.

My question was focused on how to implement this correctly within the ProSeries program.

[Accountant-Man]

So you have to qualify for HOH in order to get the exclusion? Then why not file HOH?

Otherwise,  not qualifying for exclusion. MFS just because doesn't qualify. It is strictly forbidden.

[Terry53029]

I believe you can file MFS and get the exclusion, but not the credit