FSA VS Child Care Credit?

Question

Can I claim both, the FSA and the Child Care credit?
If the max on the FSA is $5,000 and the mak (with one child) is $3,000, but my child care expenses are well over $9,000; will I be able to get both tax credits? Or choose betweeon one or the other? It should be noted that out house hold combined income will only allow for the 20% deduction on the Child Care credit.

Answer 1

Unfortunately, you are limited to $5,000 of dependent care benefits taken out of your pay before taxes. If you do not use the dependent care benefits, then you could take a credit against your out of pocket child care expenses up to $3,000.

Form 2441 asks you to show your DCB and will disallow any credit if you take DCB over $3,000. However, as an example, if you took DCB of $2,000 then you could take the credit for child care for expenses up to $1,000.

See Form 2441 Part III Dependent Care Benefits to see the computation.

http://www.irs.gov/pub/irs-pdf/f2441.pdf

Answer 2

If you use an FSA to pay the child care expenses, you cannot take the credit.