Question

Child Tax Credit and Payflex Accounts

Forum|Forum|1 year ago
July 31, 2024
2 replies
0 views

Why does using a payflex account to pay for dependent care make you ineligible for Child Tax Credit? My work does not provide on site childcare. I use these pre-tax dollars to pay for child care for the whole year (includes summer camps not just after school care). However, every time I file taxes, it says I am not eligible even through I spend thousands on child care.

Ask the Experts - Dependents - July 2024

X

xmasbaby0

Employee

You are already using untaxed money to pay for your childcare. You are not allowed to "double dip" and get a tax credit for the money spent on childcare.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

L

Loly12313Author

Thank you for this. What if the cost of childcare is more than what is placed on Payflex. EX: State limits amount of money to place on Payflex and is $4,000, but the cost of childcare for the year is $8,000. Would you then qualify for the tax credit?

X

xmasbaby0

Employee

No. You only get up to a $3000 child and dependent care credit per child--- and you are already getting more than that in money that has not been taxed. You cannot double dip.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

carolineb

Hello @Loly12313 !

Child care is certainly expensive, and having a payflex account does help with that expense. However, the IRS limits the amount of child care paid to $3000 per child in order to be eligible for the Child and Dependent Care Credit. So if you are paying $10000 per child, you are limited to taking only $3000. If you're using funds from a DCB account to cover childcare or dependent care, you cannot claim the credit for those same expenses. Since DCBs offer up to $5000 of pretax dollars, this is still a better deal for you tax wise.

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