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Frequently Asked Questions

Which is more advantageous, having a Dependent Care FSA or claiming the Child Care Tax Credit on my income tax return?

Your particular tax situation will affect which option makes more sense. Generally, those with lower income levels (under $30,000 annually) will see a greater advantage to using the Child and Dependent Care Credit. As your income level increases, the advantages become greater under the Dependent Care FSA.

In some cases, you may be able to take advantage of both. If you have two or more eligible dependents receiving eligible care, you may set aside up to $5,000 in a Dependent Care FSA and claim $1,000 of the Child and Dependent Care Credit (for a total eligible child care expenses of $6,000).

Please consult a tax professional if you are unsure of which option is more beneficial for your particular tax situation.

Here are some external resources you may reference for more specific details: 

 

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