I am trying to understand the relation (if any) between the Child & Dependent Care Credit (especially with the updates from the American Rescue Plan) and a Dependent Care FSA. Are the two mutually exclusive or if you utilize a DCFSA does that mean you can't take advantage of a portion or all of the C&DCC?
The DCFSA let's you reduce your taxable income while the C&DCC gives you an actual credit but they are looking at the same pool of money (the money you spend on child care.) Is it something to where the C&DCC can only be utilized for child care expenses above and beyond they amount you designated for your DCFSA?
I just can't see how the IRS would let you get a deduction and a credit off of the same money and if not then it would seem to me, based on your income and the expanded C&DCC through the American Rescue Plan, that one would might be better off not using a DCFSA and taking advantage of the credit that the C&DCC provides.
Much obliged for anyone helping educate me on this.
