I've read you can't "double dip" on the DCFSA and the Dependent Care Credit, but what does this mean in practice? Here's my case:
- I have one child, who is in daycare
- my AGI puts me at the 20% tier for the Dependent Care Credit on my 2021 return.
- I had $19k in eligible daycare expenses
- I had $9k in my DCFSA (switched jobs hence why it is lower than the $10.5k max)
My understanding is thus that the $9k from the DCFSA reduces eligible daycare expenses to $10k - still above the 2021 8k limit - and then my credit would be 20% of that 8k at my AGI - so $1.6k. Is this the correct interpretation of how the DCFSA and the Dependent Care Credit function together?
