 Alright, let's add another person. So now we've got another dependent and then I'm gonna jump on over here and say now We've got a two dependents. I'm gonna add another one. Let's say we're paying for both of them and Let's say we're paying them to the same institution five thousand each So I'm gonna say qualified dependent care five thousand each will say but it's going to the same institution So I'm gonna have the same institution having ten thousand So now I've got two people right so you might have them go into two different institutions So you could have them going to the same institution which might look something like this So if we jump back to the form 1040 then we're gonna say alright Anderson two dependents now 20 let's bring the income back up to one hundred thousand 100,000 on the income so we don't hit any limit there and so I'm gonna go boom and Then a hundred thousand page number two So we have the four thousand for the child tax credits and now we're up to the 1200 which is pulling ultimately from the two four four one So now we've got the the institution amount of the ten thousand to two people two children Five and five we got limited to the not the three thousand for one But six thousand but it's gonna cap at six thousand even if we go above that even though we paid ten thousand and then It's gonna be picking up that twenty percent based on the qualified amount which is the six thousand and that's where we get the 1200 we don't have any We still have tax, so we're not gonna hit a limit because of the non refundable. That's what's pulling over now If I add one more, let's do one more here Because why not at this point? So we'll add another one Not there. Hold on a second. I'm gonna add another one here, so we'll say another and this is gonna be Eric Eric and we'll say on The second one will say we paid for Eric another five thousand to the same institution So we're gonna start at qualify five thousand same institution And so now this is at fifteen thousand now You would think if they capped it three three and three we would get three six nine But no it's still gonna cap it at that one thousand two hundred So if I go to page one, we're at three kids. We paid all three of them We still got the child tax credit, which is at six thousand But we're still at the one thousand two hundred here for the child independent care expenses So if I go down to the two four four one Then you could see That we're still here because it capped it at the six thousand for two or more children All right, so we have a similar situation if married so let's go to the married situation But we would have to have both spouses working would be the general idea in order to take the credit So for example here, I just switched it up to married but I didn't I didn't assign The W2 wages to to to the spouse Jane here So now we still have the three dependents a hundred thousand now the standard deductions at twenty five nine Getting us to the seventy four one page number two We still get the six thousand child tax credit But we don't have anything being calculated for the other credits because I didn't assign any income To the other spouse so this is where it becomes important in tax software To a to assign the income so let's imagine they both earned fifty thousand with two separate W2 forms W2 if I don't if I don't check off notice if I do this fifty thousand and Fifty thousand and let's say that these were two W2's for first two different spouses That's legitimate, but I didn't properly mark off which W2 is for which Oftentimes it doesn't matter Because they're one entity for taxes right there one financial entity, so it's still a hundred thousand everything looks correct, but The problem is here this particular credit is going to be based on whether or not each Individual spouse had earned income, so I have to make sure that I go and say I'm checking this one off for the spouse So that I can assign that to the spouse So that they can have their their earned income so that with the the credit will then populate within the software So now if I go back to the two four four one, we've got the same Kind of scenario, but the idea being that that both spouses have to be working because if it was a one spouse working Household a traditional household you would think that The other spouse could take care of the kids and you wouldn't need the expenses in order to work Whereas a single family household you would think that they that would be the case again It's kind of funny the way these these laws populate you can you can see that makes sense to one degree because you're like that But it also kind of disincentivizes marriage again because because the anyways, so Now the other thing to be aware of is you might get say a benefit if you're if you're working for an Employee or and you get a benefit say on a w2 that the employer is paying for dependent care And remember when you have an employee employer kind of situation Oftentimes what the employer could have their money go a little bit further If they can give money that would be have a tax benefit to the employee like a 401k plan The 401k plan then has the income not included in box one So the employer is able to pay the employee Without having that significant tax benefit or at least by deferring it So if you could do that with other things like Like a dependent care or something like that have the employer be able to pay and not include it in income That would be great, but it gets a little bit confusing Then if you have a credit that could be possible and then you've got this dependent care benefit So let's imagine for example box 10 of the w2 has Has dependent care benefit of 6,000 so then if I go back on over notice it's limiting the credit here To the 1,000 so we still said that we paid The 15,000 but and then the 5,000 each but says here add the amounts of line D to enter 3,000 if you had one or qualifying person 6,000 if you had two or more if you complete part three So it's going to be the 1,000 so if we go to part three then dependent care benefits We have the 5,000 that won't go through the whole thing But the general idea is that we had to limit it to the 1,000 And by the way the reason it got limited to the 1,000 instead of The 6,000 wiping it out entirely is because generally If I if I go back on over here Usually this number will be kind of capped at 5,000 Because you can get the dependent care benefits that go over the 5,000 But then that amount over the 5,000 the 1,000 would generally be included in box one Of the w2 which means it would be subject to the the Federal income tax right so the 5,000 amount might be in box 10 and possibly not in box one Therefore not subject to the federal income tax. That's the part you're getting the benefit from Now also note we have the age test for the children But if they were over 12 and disabled at the time to the age test The you know under under 13 was it the age test So if they were over that age but disabled then that would be kind of a exception To that general age test rule And then you also want to be looking into the idea of if the care provider is the taxpayers household employee Because you want to make sure that if they you have an household employee That you're properly calculating this credits as well as properly Dealing with the household employee situation and seeing if you need to be dealing with like payroll taxes social security and medicare and That kind of stuff also remember that the e in that number here Would be the typical thing that you would get from an institution if it's a if it's a Institution of some kind other than that then you would think the it would be a social security number an ssn