how much is child deduction worth?

[Anonymous]

first baby is on the way. HHI is 260k (but both max out 401ks, so taxable is a bit lower). anyone have a decent guess at how much the childcare deduction will be worth, tax wise?

[Anonymous]

Anonymous wrote:first baby is on the way. HHI is 260k (but both max out 401ks, so taxable is a bit lower). anyone have a decent guess at how much the childcare deduction will be worth, tax wise?

Not much. There is a cap. I pay $750 a month and get a deduction for only a portion of that. Get a pre-tax dependent care account set up.

[Anonymous]

Next to nothing at that Hhi.

[Anonymous]

You mean, Child Tax Credit? It's zero if your MAGI > 130K.

[Anonymous]

Anonymous wrote:

Anonymous wrote:first baby is on the way. HHI is 260k (but both max out 401ks, so taxable is a bit lower). anyone have a decent guess at how much the childcare deduction will be worth, tax wise?

Not much. There is a cap. I pay $750 a month and get a deduction for only a portion of that. Get a pre-tax dependent care account set up.

You must not live in the DC area.

[Anonymous]

Do either of you have an FSA at your work? If so, you can take out $5,000 pre-tax, which means you're not paying taxes on $5K of income, which is pretty good. (now you'll probably pay $15-$20K for child care, but at least pre-tax $5K is good.)

You'll also have the dependent exemption, so that's another $3600 or so.

If you're really curious, print out a tax form and do your taxes using estimates for your numbers. It'll give you an idea about how your tax liability will change.