Dependent Care - Maximizing my tax savings?

Question

My wife and I both have a Depepndent care plans at our jobs, I know that we are allowed to contribute up to $5000 per year into the account for daycare expenses and I also know that the IRS provides a dependent care tax credit for expenses up to $3000 per year.

Since our yearly daycare expenses are close to 10k can we use both tax saving programs to our advantage or are there any restrictions?

Answer 1

You can spend the money for qualified services without any pain. Just make sure that you can spend all the money in both accounts as you lose anything you don't spend.