Dependent Care Tax Credit

[Icepuck]

Got a question about the credit.

At my workplace they have these 'flex' spending accounts where they remove before-tax money and put it in an account to pay for childcare. That way, your tax burden is lessened. But there's also a dependent care credit on taxes where you put in your child care expenses, and get a credit back for them.

On the tax form, it says you have to remove any dependent care benefit from your workplace. Now as far as I know, the flex account is MY money - it's not a 'benefit'. Do I get to claim it?

How does that work?

 

[kwillia]

Got a question about the credit.

At my workplace they have these 'flex' spending accounts where they remove before-tax money and put it in an account to pay for childcare. That way, your tax burden is lessened. But there's also a dependent care credit on taxes where you put in your child care expenses, and get a credit back for them.

On the tax form, it says you have to remove any dependent care benefit from your workplace. Now as far as I know, the flex account is MY money - it's not a 'benefit'. Do I get to claim it?

How does that work?

You don't get the child care tax break twice. If you used flex plan to avoid paying taxes on the child care money, you cannot claim the tax break on that money since you didn't pay taxes on that money. If you had 3,000 taken out for flex spending and spent 4,000 on child care for the year, you can get the tax break on the 1,000 that wasn't covered under flex spending.

 

[Chasey_Lane]

You don't get the child care tax break twice.

Yeah nomo...you hear that?

 

[Icepuck]

You don't get the child care tax break twice. If you used flex plan to avoid paying taxes on the child care money, you cannot claim the tax break on that money since you didn't pay taxes on that money. If you had 3,000 taken out for flex spending and spent 4,000 on child care for the year, you can get the tax break on the 1,000 that wasn't covered under flex spending.

You know, that makes the most sense, and that's how I just guessed it would work. Heck I am going to spend a lot more than 5000 alone so I'm going to get a break twice. My guess is I'm gonna spend more than twice the amount.

 

[kwillia]

You know, that makes the most sense, and that's how I just guessed it would work. Heck I am going to spend a lot more than 5000 alone so I'm going to get a break twice. My guess is I'm gonna spend more than twice the amount.

Nope... you can't exceed the $5,000 break. We are limited to writing off only $5,000 no matter what we spend during the year. If you put $5,000 in the caf plan... you don't get to write any more off at the end of the year.

 

[Chasey_Lane]

Nope... you can't exceed the $5,000 break. We are limited to writing off only $5,000 no matter what we spend during the year. If you put $5,000 in the caf plan... you don't get to write any more off at the end of the year.

Leave 'em alone and let them do their taxes.

 

[Icepuck]

Ok, one more question - is 5,000 the maximum cap for a FAMILY or just one individual? Because I think the tax credit poops outs depending on income.

Say I put in 5000 at my workplace. Can my wife put 3000 in her workplace, and forget about the tax credit - just pay 8000 from pre-tax earnings?

 

[kwillia]

Ok, one more question - is 5,000 the maximum cap for a FAMILY or just one individual? Because I think the tax credit poops outs depending on income.

Say I put in 5000 at my workplace. Can my wife put 3000 in her workplace, and forget about the tax credit - just pay 8000 from pre-tax earnings?

I'm pretty sure 5000 is the cap per family.