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Level 2
June 22, 2020

Child Care Exclusion for MFS

  • June 22, 2020
  • 1 reply
  • 9 views

I have a couple who files as MFS because of student loan issues.  They have one child.  Both parents set aside $2500 in an employer-provided Dependent Care Account. I know they are not eligible for the Child Care "Credit", however it was my understanding that they still qualify for the "exclusion", where neither of them should have to pay taxes on the $2500 they used for daycare.

When I try to file, one return is rejected because the child's SSN is found on the other tax return that was accepted. How do I get the exclusion to go through for both of them?

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    1 reply

    Just-Lisa-Now-
    Intuit Community Champion
    June 22, 2020
    BobKamman
    Level 15
    June 22, 2020

    @Just-Lisa-Now- 

    I don't think that's the situation, these spouses live together.  They are just victims of the insane rules concerning forgiveness of student loans for someone who works in a public-service job (like teaching at an inner-city school) for ten years.  If the couple files jointly, the combined income is used to disqualify the one who would otherwise qualify for loan forgiveness.

    I think they made a mistake by splitting the $5,000 dependent-care contribution.  But I'm not sure how the first MFS return would have allowed it, either.  

    Just-Lisa-Now-
    Intuit Community Champion
    June 22, 2020
    I agree, I just wondered if this is the info the OP is trying to make fit their situation.
    ♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪