Dependent Care FSA

[jitter77]

My work offers a dependent care FSA and was debating if it was worth it. The max you can claim is $5000 and i think we only put out about $2500. My questions are has anyone used one of these, how easy are the reimbursements, and since the FSA is taken out pre tax don you still claim dependent care on taxes? Basically is the possible savings worth the hassle

 

[SteelerInLebanon]

My work offers a dependent care FSA and was debating if it was worth it. The max you can claim is $5000 and i think we only put out about $2500. My questions are has anyone used one of these, how easy are the reimbursements, and since the FSA is taken out pre tax don you still claim dependent care on taxes? Basically is the possible savings worth the hassle

Also consider you have to use it all each year or lose those funds.

 

[jitter77]

Also consider you have to use it all each year or lose those funds.

Yeah i would definitely underestimate the amount to be sure none got "wasted"

 

[ark steel]

I think, if you put the amount in the FSA, it may come out before SS taxes come out, too. If so, this would definitely be a savings over putting it on the 1040. If you do not itemize on the 1040, can you still, deduct child care? Is the deduction limited based upon your income?

The healthcare FSA rules changed some over the last few years where you can roll over a little from year to year, but I do not know if that changed for dependent care FSA's or not.

 

[oneforthebus]

If it is like a HSA, you put pretax dollars in it, thereby reducing your taxable income, so no, you would not be able to also deduct the cost of your dependent care because that would in effect be deducting it from your income twice.

As far as our HSA goes, we pay our medical expenses out of it with a debit card. Easy as using any other bank account, you just have to make sure you save the receipts. If you get audited you have to prove you used the money for the correct purpose.

 

[SteelerInLebanon]

If it is like a HSA, you put pretax dollars in it, thereby reducing your taxable income, so no, you would not be able to also deduct the cost of your dependent care because that would in effect be deducting it from your income twice.

As far as our HSA goes, we pay our medical expenses out of it with a debit card. Easy as using any other bank account, you just have to make sure you save the receipts. If you get audited you have to prove you used the money for the correct purpose.

HSA’s are superior to FSA

 

[jitter77]

Yeah HSAs are nice, but they don't have an HSA for daycare. From what i can tell with this FSA you pay out of pocket then have to file a reimbursement claim to your FSA provider. You don't seem to get a card that you can just use to pay.

Yes you cam deduct daycare without itemizing. I forget what the limit is.

 

[oneforthebus]

So I guess you'd need to figure out whether the deduction benefits you more or the tax savings up front. Probably depends on your income level, tax bracket etc.

Like everything else having to do with taxes it's never simple and easy.

 

[Steelin]

We still were able to claim the child care tax credit while having a dependent care FSA. It was definitely a good thing for us.