10-15-2009, 03:23 PM
Yes, it is a dependent care flexible spending account specifically for paying child care service. She also has a healthcare flex account that is separate. Both are "use it or lose it".
I really appreciate the advice! The account is actually capped at $4992 for some odd reason and not $5k (or $4k as I previously misstated). I know I'll have at least $11k in 2010 of childcare with 2 kids, so I'm hoping to use her $5k first and then pay the $6k out-of-pocket and claim the credit on that amount.
For those of you that aren't familiar with the childcare tax credit, you get a credit of 20% or more of your qualified childcare expenses (up to $3k for 1 child, $6k for 2 or more children) if both you and your spouse work (both must have W2 or schedule C income in excess of $6k each). This is not phased out based on income! It'll amount to $1200 credit for a family with 2 or more kids and both parents working. This is separate from the $1k/yr child tax credit that is phased out based on income.
Thanks again all.
I really appreciate the advice! The account is actually capped at $4992 for some odd reason and not $5k (or $4k as I previously misstated). I know I'll have at least $11k in 2010 of childcare with 2 kids, so I'm hoping to use her $5k first and then pay the $6k out-of-pocket and claim the credit on that amount.
For those of you that aren't familiar with the childcare tax credit, you get a credit of 20% or more of your qualified childcare expenses (up to $3k for 1 child, $6k for 2 or more children) if both you and your spouse work (both must have W2 or schedule C income in excess of $6k each). This is not phased out based on income! It'll amount to $1200 credit for a family with 2 or more kids and both parents working. This is separate from the $1k/yr child tax credit that is phased out based on income.
Thanks again all.