DCFSA & Child Tax Credit

Yes you can use the dependent care flex spending account , in addition to the child tax credit.  

The dependent care FSA is a program that the employer manages for your benefit - you contribute tax-free dollars to it, and then charge dependent care expenses to it. 3. The child and dependent care credit is intermixed with the use of the dependent care FSA.  The Dependent Care FSA (DCFSA) maximum annual contribution limit did not change for 2024.  It remains at $5,000 per household or $2,500 if married, filing separately.  

While the child and dependent care credit is attractive, you may save even more money with other options. For example, if your employer provides a way to pay for childcare with "pre-tax" dollars—that is, money that's taken out of your paycheck before taxes are calculated—the amount you save in taxes may be greater than what you get with the credit.

• This may be possible with a Flexible Spending Account or similar account.
• Consider checking with your employer's human resources department to explore your options.

And while you're at it, take time to learn about other tax breaks available to parents.

The Child Tax Credit is a tax credit you can claim for each qualifying dependent child on your return. You can get up to $2,000 for each child under age 17 if you meet all of the conditions.  See this article for more in depth discussion.

Edited 8/21/2024 12:38 pm