Dependent Care FSA

Do you like paying less taxes?

Great idea. I did it for both of my kids when they were in nursery school. You just need to ask how it works - will they give you a card (and will your preschool accept the card) or will they reimburse you?

For first kid, we got a card, but the preschool had tons of issues using the card. So we just got rid of it. We just ended up getting reimbursed. Now that's a bit of a cash flow issue, because the money comes out your check, then you still have to pay the preschool, and then get reimbursed. But the reimbursement only took a couple of days, and we saved about $1500 per year in income taxes (federal was about 1300, and when we moved back to LA, another 200 in state taxes).

With one kid, you won't be able to get the child care tax credit, but the dependent care FSA is a better deal.

We use it. One issue is that I put money in each month, but it's not enough to cover the whole bill for that month. So we let the account build up the first six months, then we're going to use that account to pay the second half. Well, we forgot....haha. good thing is daycare refunded our credit card and just took a lump sum from the FSA

Does this work in conjunction with or instead of the childcare tax credit?

If I pay, for instance, $7,000 for daycare and I put $5,000 into the FSA can I apply the other $2,000 to the childcare tax credit?

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Does this work in conjunction with or instead of the childcare tax credit?

If I pay, for instance, $7,000 for daycare and I put $5,000 into the FSA can I apply the other $2,000 to the childcare tax credit?

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The way I interpret it, yes. But obviously I'm not well-versed in this yet. I'll defer to one of our resident experts.

This is an explanation I read this morning:

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Your qualified dependents for a Dependent Care FSA may include:

Your child(ren) under age 13.
Dependents of any age who are mentally or physically incapable of caring for themselves, and whom you claim as a dependent on your federal income tax return.
An adult may qualify as your dependent if you provide more than half that person’s maintenance costs during the year.
Expenses for care of a qualified dependent are only eligible if the care enables you (or you and your spouse) to work, look for work, or go to school full-time. If your spouse is a stay-at-home mom or dad, you cannot participate in Dependent care FSAs.


Eligible expenses include:

Fees for licensed day care or adult care facilities.
Amounts paid for services (including babysitters or nursery school) – provided in or outside of your home – for the care of a qualified dependent necessary to allow you and your spouse to work, look for work, or attend school full-time.
Placement fees for a dependent care provider, such as an au pair.
Summer day camp for children under age 13 qualifies if attendance allows you and your spouse to work, look for work, or for your spouse to attend school full-time.
Before and after school care programs for dependents under age 13.
Payment to a relative (age 19 or older who is not your dependent) who cares for your qualified dependent.
Payment to a housekeeper whose duties also include dependent day care.


Expenses that are NOT eligible for Dependent Care FSA payment include:

Baby-sitter in or out of your home for reasons other than to enable you to work.
Food, clothing, and entertainment.
Child support payments.
Activity fees and educational supplies.
Overnight camp.
Cleaning and cooking services not provided by a caregiver.
Late Payment Fees.

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Okay, so stupid question, but my son is 3 and goes to a private school that starts at age 2 and goes through 12th grade in which I pay $8800 between tuition + after school care, and then I pay another $1600 for summer camp. I should be using the dependent care FSA through my employer for sure?

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Absolutely. Until kindergarten, you can run $5000 of that tuition through the FSA.

Once he hits kinder, you can no longer run the tuition through there, but you can run after school care and summer camp until he turns 13.

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I wish they'd raise that $5,000 limit to $10,000. Anybody with 2 kids paying full time daycare blows that $5,000 out of the water.

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2 kids? 1 kid usually blows that out of the water.

I was trying to figure all of this out the other day and came to 0 conclusion.

Daughter 1 is in daycare, it's about $9,000 a year.
Daughter 2 arrived in Sept 16, so we can claim 2 kiddos.
Next year both daughters will be in daycare, and I will cry a lot.

I put 5k into FSA this year.

I should be able to benefit from both the FSA and the tax credit right?

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you would get a credit of $200.

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Book the cruise!!!!

9k in child care this year, and 18k next year, and that's what I get.

Thanks Obama.