Dependent Care FSA

peggels24 · October 2014

Does anyone have a Dependent Care FSA set up? Open Enrollment starts 11/5 and I was just curious if there were any traps or issues that I should be aware of. We intend on putting the baby in a daycare facility starting in May or June.

Pips09 · October 2014

Yes I have one. I also administer the benefit for my company. There aren't any traps, it's a great way to save money on the taxes. Just make sure you only put in what you will use, or else you will lose what is left over.

[Deleted User] · October 2014

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peggels24 · October 2014

Pips09 said:

Yes I have one. I also administer the benefit for my company. There aren't any traps, it's a great way to save money on the taxes. Just make sure you only put in what you will use, or else you will lose what is left over.

Thanks! Unfortunately even the max will only cover 11.5 weeks of daycare so I'm not too worried about putting too much in.

peggels24 · October 2014

Britt1406 said:

I looked into doing this, however decided against in. The reason being is that if you pay for your daycare though this, you cannot write it off in your taxes. Since DH receives a 1099 and doesn't pay taxes through the year, we prefer to save our deductions until the end of the year and write off daycare at tax time.

That makes total sense and if I was dealing with a 1099, I might do that as well. Question - I assume that only the portion paid through the FSA is no longer a write-off?

Pips09 · October 2014

peggels24 said:

Britt1406 said:

I looked into doing this, however decided against in. The reason being is that if you pay for your daycare though this, you cannot write it off in your taxes. Since DH receives a 1099 and doesn't pay taxes through the year, we prefer to save our deductions until the end of the year and write off daycare at tax time.

That makes total sense and if I was dealing with a 1099, I might do that as well. Question - I assume that only the portion paid through the FSA is no longer a write-off?

You can't just write off child care, so I assume you guys are talking about the child care tax credit. That is done on a sliding scale depending on your income, and the most you can take is $3000 for one child, and $6000 for two children. For most people, the dependent care FSA is still going to be a better savings. If you have two children, you can still claim the $1000 on top of the FSA, to round out the tax credit amount, but again, it's on a sliding scale, so the more you make, the less you can claim.

[Deleted User] · October 2014

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AlfiesMOM · October 2014

I have no other suggestion just to say I love our FSA! It is hard seeing the money come out but in the end its totally worth it!

llambrose · October 2014

This past year was the first year that I have done one. I did a $1000 one and it has been nice reimbursing myself for my daycare expenses when I need it. I really used it around my daughter's birthday, I got the money back for several weeks and used that to pay for her party. Since it was money that was already gone, it didn't stress me out as much to spend it. I will plan on doing this again for Christmas too.

JosephsSweetie · October 2014

We use it with our nanny. The only thing to be careful with its not to put in more than you will use that year because you can't get it back, and you can only use it for hours covered while you are working (not running errands, appointments, etc.). Just submit the receipts and it is very easy!

megdaig · October 2014

I will be putting in the full $5000 into my dependent care account, but I'm waiting until little one is born and I can change my elections. I hate to be all negative, but I want to make sure that I have a baby to put into daycare before I'm out $5k. I'll be able to take a tax deduction for up to $3000. So just shy of covering all of daycare expenses.

peggels24 · November 2014

@ladyamanuet I think it's one or the other

ECATX · November 2014

I was just looking into this, too. It looks like you can either claim the credit or do the FSA, but not both. From what I read, most people benefit more from the FSA, but it depends on your tax bracket. I find the whole thing confusing because the limit doesn't even come close to covering half of our daycare expenses, so I'd be contributing to the FSA while still paying for daycare. I wish I could just pay the whole thing out of the FSA account, even if they capped the tax benefit at 3k (or I think 6k for two kids).

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