S/O - dependent care FSA

ccam · November 2013

This is all new to me. I just received information about open enrollment. So a question for those of you who take advantage of this...

Are you able to have a dependent care FSA and take Child and Dependent Care tax credit? The limit for our FSA is $5000, but I pay well over this amount. So could we claim the difference on our tax return?

jlaOK · November 2013

Not for one child. They are basically the same thing, the only difference is the amount. Since you can put $5000 in your FSA and only claim the tax credit for $3000, the FSA is a better deal (but a bigger pain). There are also some income limitations when using the tax credit.

I believe that if you have more than once child (and therefore qualify for the $6000 tax credit) you can claim the additional $1000 on your taxes. Someone correct me if I'm wrong, but I'm hoping to do this for 2013.

aglenn · November 2013

ArkansasMom22 said:

From what I have researched, yes you can. However you can only claim what wasn't covered by your FSA. So if you pay $8000 a year for child care and had $5000 in your FSA that was used you can claim the remaining $3000. The reasoning is that you paid taxes on the $3000 so it would be eligible.

This is my understanding as well. You can claim both if your expenses are high enough but you can't double-dip with the same dollars.

ccam · November 2013

aglenn said:

ArkansasMom22 said:

From what I have researched, yes you can. However you can only claim what wasn't covered by your FSA. So if you pay $8000 a year for child care and had $5000 in your FSA that was used you can claim the remaining $3000. The reasoning is that you paid taxes on the $3000 so it would be eligible.
This is my understanding as well. You can claim both if your expenses are high enough but you can't double-dip with the same dollars.

Ok, great. That's kind of what I was getting from my research, too. I pay well over the $5000 so I think I'd qualify for both.

preggersin2011 · November 2013

I do my taxes on turbo tax, I know there is something I claim on my taxes besides the day care FSA......it depends upon the total amount you pay for day care. The program does it for me and won't let me double deduct

Pips09 · November 2013

You can only use both if you have more than one child, and paid at least $6000 in daycare expenses (assuming you do the full $5000 for the FSA). The child tax credit is maxed out at $3000 for one child, $6000 for more than one, so you could claim the extra $1000 for the tax credit after using the FSA. The tax credit is also on a sliding scale and is more beneficial to lower income households. You are allowed a lower percentage of the credit the more income you have.

Nechie122 · November 2013

ArkansasMom22 said:
From what I have researched, yes you can. However you can only claim what wasn't covered by your FSA. So if you pay $8000 a year for child care and had $5000 in your FSA that was used you can claim the remaining $3000. The reasoning is that you paid taxes on the $3000 so it would be eligible.

This is true, but PP is correct that the entire $3000 you go over (in your hypothetical example) isn't eligible for the tax deduction. The total credit/deduction caps out at $6,000 for two or more kids, and there are also income limitations.

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