The total expenses that you may use to calculate the credit may not be more than $3,000 (for one qualifying individual) or $6,000 (for two or more qualifying individuals).
If you received dependent care benefits ( amount reported in box 10) that you exclude or deduct from your income, you must subtract the amount of those benefits from the dollar limit that applies to you.
You can use a dependent care FSA with the dependent care tax credit. However, the same dollars can’t count for both benefits.
The amount in box 10 reduced your taxable income so it can't be used again to receive the credit.
If your employer offers a dependent care FSA, you will benefit by contributing to it. You’ll reduce your taxable income and pay for dependent care simultaneously. Reducing your taxes up front is usually more beneficial because the dependent care tax credit lowers your taxes due but doesn’t increase your refund.
Plus, dependent care will probably cost you more than $5,000 annually. So, you can claim out-of-pocket expenses for your dependent care tax credit, taking advantage of both tools.
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