FSA account ?

kim_and_tony

Is the $5000 I can use pre tax for daycare on a per child or per family basis?

If you have two kids are you still better off taking the FSA benefits or claiming daycare on taxes?

With two kids (someday) we will be paying $20,000/year on daycare (i just threw up) and I want to do it the smartest way possible tax-wise.

TIA!

charmgal

The maximum for an FSA is $5,000 regardless of how many children you have. For the dependant care credit, the most you can claim is $3,000 for one child or $6,000 for two or more.  That figure may be reduced by a percentage depending on how much your income is.  That percentage is as much as 80%.  Once your AGI reaches $43,000, the max credit you can get back is $600 for one child or $1200 for two or more children (20% of $3,000 or $6,000).  Thus, if your income is more than $43,000, it probably makes more sense to do the FSA, since you're reducing your AGI by $5,000.  Although, frankly, the difference is pretty marginal, given that the max you can contribute is to the FSA is $5,000.  Don't forget that if you have two or more children and your daycare expenses exceed $6,000, you can put $5,000 into an FSA and then take the credit for the remaining $1,000.  That equals out to a $200 tax credit if you make $43,000 or more.  (20% of $1,000).   

annabella10

charmgal:

Don't forget that if you have two or more children and your daycare expenses exceed $6,000, you can put $5,000 into an FSA and then take the credit for the remaining $1,000.  That equals out to a $200 tax credit if you make $43,000 or more.  (20% of $1,000).   

This is what I do.

blondie75

What the previous poster said. 

kim_and_tony

TY!