Yes, if it is a qualified childcare expense. You will need too have the Daycare provider's names, address, phone, tax ID and total amount paid. For the childcare tax credit on the tax return, the maximum expenses eligible for the credit are $6,000. However, there are instances when you may be able to take advantage of both an FSA and the tax credit. Be aware that if you have a dependent care flexible-spending account, the child care expenses you cover through that FSA cannot count toward the tax credit. The DCFSA max contribution is $5,000 per household. The money in that account is made pre-tax — meaning you already get a tax benefit. You can't double dip. For example, If you have two or more eligible dependents receiving eligible care, you may set aside up to $5,000 in a Dependent Care FSA and claim $1,000 of the child and dependent care tax credit or vice versa.
Which one will save you more? Well, it depends on your particular tax situation will affect which option makes more sense.
Factors to consider include:
- your income
- your tax bracket
- how many dependents you have
Generally, those with lower income levels (under $30,000 annually) will see a greater advantage to using the Child and Dependent Care Credit. As your income level increases and for higher income earners, the advantages become greater under the Dependent Care FSA, especially if phase-out limits apply.
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