MFS Dependent Care Exclusion

[PaulH]

Husband and wife both have $1500 Dependent Care Benefits (W-2 Box 10) for the same child (and paid over $3,000 of child care expenses), file MFS because they save more in Ohio than it costs for the federal return. I know they can't claim the dependent care credit, but think they should both be able to exclude the benefit. However, the second spouse's efile is rejected (error code 0526) because the child's SSN has already been used for that purpose. How do both claim the exclusion?

Thanks,

Paul

[jainen]

>>How do both claim the exclusion?<<

... not much hope for 2007, but there's still time to have a new baby in 2008.

[PaulH]

Thanks, but really? They cut the maximum dependent care benefit that can be excluded from income for one child in half (from $5000 to $2500) for MFS, and then only let one parent take it?

Paul

[taxtrio]

You could try "paper filing" return with a letter of explanation... (old fashioned to be sure, but better than paying the tax).

[PaulH]

Thanks. I was afraid that might be the answer, but hoping there was another way.

Paul

[jainen]

>>You could try "paper filing" return with a letter of explanation... <<

Come on, folks. The whole point of the new qualifying child rules was to eliminate this kind of nonsense. The kid can only be a qualifying child on one return at a time. There are special rules in the case of separated parents, but it's still only one return for any given benefit. So I wasn't joking when I said have a new baby. Different kids is the only way to put the same benefit on both returns.

But go ahead and paper file with a letter of explanation, for sure. The IRS gets so many millions of returns, anything we can do to get them to focus special attention on our own client has got to be a good thing, right?

[PaulH]

Thanks Jainen. I see now the error of my ways. Thanks for taking the time to answer me twice.

Paul