daycare FSA vs. child and dependent care tax credit

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Rose1987
Posts: 6
Joined: Thu Jul 16, 2020 9:07 am

daycare FSA vs. child and dependent care tax credit

Post by Rose1987 »

Hi there,
I was just wondering if anyone has come across a calculator or formula to figure out the changes to dependent care FSA limits (now up to $10,500, previously $5k) versus the changes in the child and dependent care tax credit. I know I can't double dip, so I am trying to figure out the best tax strategy. Thank you!
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FiveK
Posts: 15742
Joined: Sun Mar 16, 2014 2:43 pm

Re: daycare FSA vs. child and dependent care tax credit

Post by FiveK »

You could try the personal finance toolbox. It has entries for both, so may do what you want.
csmath
Posts: 826
Joined: Sat Oct 13, 2018 11:32 am

Re: daycare FSA vs. child and dependent care tax credit

Post by csmath »

Rose1987 wrote: Mon Apr 12, 2021 11:40 am Hi there,
I was just wondering if anyone has come across a calculator or formula to figure out the changes to dependent care FSA limits (now up to $10,500, previously $5k) versus the changes in the child and dependent care tax credit. I know I can't double dip, so I am trying to figure out the best tax strategy. Thank you!
If you have more than one child then usually it comes down to the larger of either your overall tax burden (FICA+Fed+State) with FSA or the DC Tax Credit recovery rate which starts at 50% but has a phaseout. If you want help, and not just a calculator to do it yourself, we would need to know:
  • # of dependents
  • expected total DC expenses
  • AGI
  • Tax liability rates: Fed, State, if you are subject to FICA
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