@sarahndownen wrote:
With some of the key terms you all have given me, I am now well read on this subject.. it’s crazy because my participation doesn’t prohibit anyone else’s participation; they just have to opt in and sign up. Regardless- lesson learned- thanks for the help everyone!
I did have 2 kids I used the funds for so I’ll check all my options when filling out my tax forms.
If you paid at least $5000 total for the care of 2 or more children, that $2441 that has become taxable will result in a 20% credit ($488), as long as you don't file married filing separately (single, married filing jointly and head of household are all fine). Depending on your filing status and income (plus a spouse's income, if married) your tax bracket could be between 22% and 35%, so a 20% child care tax credit will offset at least half and maybe almost all of the tax from the increased taxable income. You may also qualify for a child care credit in your state if your state offers one, that will offset some of the increased state income tax.
