Is it better to utilize the Flexible Spending Account or the federal income tax credit for dependent care expenses?
Your individual circumstances and income will determine whether the federal, state (where eligible) and Social Security tax savings under the Dependent Care Spending Account provide greater tax benefits than using the federal tax credit. Since individual tax situations vary, it is important for you to select which approach offers more favorable tax savings. Contributions to the Dependent Care Spending Account reduce your federal tax credit availability. As of January 1, 2003, you may combine the Dependent Care Spending Account with the tax credit availability amount to a maximum of $3,000 for one dependent and $6,000 for two or more dependents.
Related Questions
- Is it more beneficial for me to participate in the Flexible Spending Account Dependent Care Reimbursement plan or to take the Child Care Credit on my Federal Income Tax return?
- Is it better to utilize the Flexible Spending Account or the federal income tax credit for dependent care expenses?
- Who is a qualifying dependent for purposes of a Dependent Care Flexible Spending Account?
