When would you use dependent care through your employers - when it is offered and you have dependent care expense and can reasonably estimate how much expense you will have.
Why would you use dependent care through your employer -there are two major benefits of the credit:
- This is a tax credit, rather than a tax deduction. A tax deduction simply reduces the amount of income that you must pay tax on. A $1,000 deduction, for example, might reduce your tax bill by only $150 or $200 depending on your tax bracket. A tax credit, however, directly reduces your taxes, dollar for dollar. A $1,000 tax credit cuts your tax bill by $1,000.
- A lot of tax breaks have income limits and are not available at all to people with incomes above those limits. In most years you can claim the credit regardless of your income. The Child and Dependent Care Credit does get smaller at higher incomes, but it doesn't disappear - except for 2021. In 2021, the credit is unavailable for any taxpayer with adjusted gross income over $438,000.
For more details, please take a look at this link: https://turbotax.intuit.com/tax-tips/family/the-ins-and-outs-of-the-child-and-dependent-care-tax-cre...
