flexible spending account? child?

Question

I really don't understand about that. I am not sure I should do this. how does this work? on my w-4 filled out one for child tax credit but for fsa should I do it? if so how much? day care is going to cost 182/week. if I chose to do it, do I need to file a claim or when i file end of the year return? I am really duh on that part.

Answer 1

When I figure for my flexible spending account for childcare , I multiply the number of weeks in the year 52 x the amt{your case 182.00} Will you be having any off days where you will keep your child with you{as long as the day care doesn't charge you.} subtract this amount. My day care gave me one week vacation a year. so I subtracted this amount. This is really more beneficial for you than using the childcare tax credit{ you cannot use both} Because By removing money for childcare before your taxes are applied to your income, lowers your your income bracket so you have less taxes to pay . That is why the program is considered a benefit . But be careful, save your receipts and turn them in , other wise the "plan keeps the money and we don't want that. Money will be taken from each check before taxes are applied to your earnings for child care . you will get his money back after you turn in your receipts for child care without the tax man ever touching it . A planned legal loophole!

Answer 2

The child tax credit is separate from the dependent care credit, and you still get the child tax credit even if your day care expenses are covered by money excluded from income tax through a flexible spending account.

You'd file a claim on the fsa whenever you want to as long as it's before the annual deadline - ask the administrator when that is. You could most likely file claims a number of times through the year.

Answer 3

When you select the FSA, you don't report it at all. The company takes the money out of your check before calculating income taxes, and does not include it at the end of the year as taxable income on your W-2.

From IRS pub 969

"Contributions to an FSA
You contribute to your FSA by electing an amount to be voluntarily withheld from your pay by your employer. This is sometimes called a salary reduction agreement. The employer may also contribute to your FSA if specified in the plan.

You do not pay federal income tax or employment taxes on the salary you contribute "

Answer 4

Nicenurse gives a very comprehensive explanation.

As to your last question, please understand that your paycheck will be reduced by the amount that you choose to contribute each payday. It is therefore in your best interests to reclaim that money as soon as practicable. It is your money after all.