what is the difference between flexible spending account for childcare and tax exemptions on w-4?

Answer 1

Both of these reduce your take-home pay.

The number of exemptions on your W-4 determines how much federal income tax is withheld from your pay. When you file your taxes you get any overpayment refunded to you.

The FSA for child care sets aside part of your pay before taxes to be used for child care. You submit your payments to your employer and are reimbursed but pay no income taxes. Whatever you leave in the account is lost if you don't use it that year or early the next year.

The FSA has an effect on the amount of taxes you owe, and the credits you receive. Have someone look at your income and FSA options to see if the FSA is a good choice for you. It can actually cost you money in some cases, so check it out before you do it.

Answer 2

With a flexible spending account you get the tax break during the year for childcare expenses (rather than waiting until you file your tax return. This has NOTHING to do with your child tax credit--that is something different.

The W-4 form is used to determine how much federal withholding you want taken out of each of your paychecks. The more exemptions you list, the bigger your take home pay will be (& the smaller your refund would be at the end of the year when you file your taxes).

They are different, but everything gets reconciled when you do your tax return at the end of the year.

Answer 3

The two have nothing to do with each other. Number of exemptions is used to determine how much tax is witheld from your check. A flexible spending account is where moeny is taken from your check and put in an account. As you incur expenses, you submit them and you are reimbursed.