For dependent care expenses, would I save more by taking a credit on my income tax instead of contributing to an FSA?
You can use both a dependent care FSA and claim the federal Child and Dependent Care Credit. You just can’t claim the same expenses for both. If you plan to use both, the IRS requires that you subtract the amount you have directed into a spending account from the expenses you use to calculate the tax credit. The IRS allows you to claim the tax credit for work-related dependent care expenses when you file your federal income tax return. The tax credit amount is calculated by applying a percentage to your total work-related dependent care expenses. The expenses to which this percentage is applied may not exceed $3,000 for one qualifying person or $6,000 for two or more. If you receive any reimbursements from a dependent care FSA, the IRS requires that you complete Form 2441 and attach it to your federal income tax return. Form 2441 requires the following dependent care provider information: • Name • Address • Social Security Number or tax identification number • Amount paid If you do not
Related Questions
- How does a parent claim a Lifetime Learning Credit for the qualified tuition and related expenses of a dependent child?
- For dependent care expenses, would I save more by taking a credit on my income tax instead of contributing to an FSA?
- Is the Dependent Care FSA better than the Federal Tax Credit for dependent care expenses?
