Childcare expenses deductions are based on the lower of either the total claimable amount, the total child care expenses or 2/3 of earned income.
In 2021 when when I filled for my wife with Turbotax it took the total expenses as the lowest value as the way it calculated the "Earned Income" was to add my wife's employment income (T4s) and her parental/maternity leave EI income(T4E) and calculate 2/3rds of this the total value, which was higher than the total expenses. I verified this by reviewing the detailed filing.
For the 2022 TurboTax is calculating the "Earned Income" differently, and isn't counting any of her parental/maternity leave EI income(T4E). Which leaves only her T4 income as counting towards earned income. This is drastically reducing the amount of deductions.
Has the method of calculating "Earned income" changed? or is this an error in the way TurboTax did the calculation?
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