DanielV01
Expert Alumni

Deductions & credits

It's how the credit is calculated.  Your $5000 is tax-free as long as you spend it on childcare (which you did), and you can claim a credit against the remaining expenses.  However, your total expenses for determining the Child and Dependent Care Credit is capped at $6000 (not $6000 above your FSA).  The maximum amount of Child Care payments for which you can claim a deduction is $1000.  If you are in the top income category of the credit, the percentage of credit on qualified expenses is 20%.  $200 is 20% of $1000, so it appears you are receiving the max credit you can claim.

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