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FSA/Child and Dependent Care Credit Question?

Forum|Forum|7 years ago
June 1, 2019
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Can you clarify this FSA/Child and Dependent Care Credit question for me? Married Filing Jointly, 2 Children, Child #1- $9068 in childcare expenses, Child #2 - $6996 in expenses. Total - $16064. We funded my wife's FSA with $5000. Is it true that this only allows us to claim the remaining $1000 under the Child and Dependent Care Credit? I would think we could claim the entire $6000 since we spent more than that over and above the $5000 we put into the FSA. The FSA was not funded by the employer.

TurboTax Home & Biz Windows

Best answer by Critter

Is it true that this only allows us to claim the remaining $1000 under the Child and Dependent Care Credit?

Yes it is ... you only get the CREDIT on the amount over the $5000 you put in the FSA because you already got the tax benefit on that $5K when you made the FSA contribution. You saved Federal + State + local taxes as well as the FICA taxes.

So, for instance, if you are in the 20% federal & 5% state tax brackets you saved :

$5K x (25% + 7.65% FICA) = $1633 instead of the $1000 on the credit form ... so you are ahead of the game which is why the FSA is so popular.

CritterAnswer

Employee

Is it true that this only allows us to claim the remaining $1000 under the Child and Dependent Care Credit?

Yes it is ... you only get the CREDIT on the amount over the $5000 you put in the FSA because you already got the tax benefit on that $5K when you made the FSA contribution. You saved Federal + State + local taxes as well as the FICA taxes.

So, for instance, if you are in the 20% federal & 5% state tax brackets you saved :

$5K x (25% + 7.65% FICA) = $1633 instead of the $1000 on the credit form ... so you are ahead of the game which is why the FSA is so popular.