Anonymous wrote:
Anonymous wrote:NP- I thought the dependent care FSA was $5000 max? Are PPs saying that if we spent $24k on daycare this year we should get an additional $1000 back if we maxed out the $5000 in the FSA? TIA!
You can get a tax credit for 20% of the last $1K--not a $1K credit. That's our situation (except x2, ugh!!) The dependent care FSA and child/dependent care tax credit rules are not aligned, which is incredibly frustrating.
So if you have only one child and make over $43K, you get:
- Credit of 20% of child care costs, up to $3K in costs, less any FSA reimbursements
- Up to $5K in your FSA pre-tax
- So if you max your FSA, you have $0 in eligible costs left. (You can't count different payments for each, sadly!)
If you have two or more children and make over $43K, you get:
- Credit of 20% of child care costs, up to $6K in costs, less any FSA reimbursements
- Still only $5K in your FSA pre-tax...
- So if you max your FSA and spend at least $6K, you have $1K in eligible costs left, and are eligible for a credit of $200.
I may not be explaining that very clearly but basically if you max your FSA and spend at least $6K on child care for two kids under 13, you get an additional $1K from the dependent care tax credit. If you have only one kid under 13, you're only eligible if you had less than $3K in your FSA. In both cases, you still want to max the FSA first if you think you will spend that much, since you get more benefit from that than from the credit.
![[Post New]](/jforum/templates/default/images/icon_minipost_new.gif){kind=icon}