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Money and Finances
Reply to "Dependent Care Spending Accounts"
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[quote=Anonymous]If you have 1 child, you will not be able to claim anything additional on your taxes. The limit for the childcare tax credit for 1 child is $3000--so your $5000 for the dependent care account exceeds that. If you have 2 children, the cap on the childcare tax credit is $6000. The dependent care limit is still $5000--so you can apply an additional $1000--which is then adjusted based on your income. If you have more than 2 kids--the cap for the childcare tax credit is still $6000, so you get no additional benefit. At higher salaries, the childcare tax credit is only 20% of the amount you are claiming and the FSA is a much better option. This article is old, but a reasonable explanation: http://www.kiplinger.com/article/business/T020-C001-S001-flexible-spending-account-vs-dependent-care-credit.html[/quote]
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