My daughter and son-in-law have an AGI of $85K. My daughter paid 4999.80 into a DCFSA account. It is reflected in box 10 of her W2. It all came out of her pay, her employer does not contribute to the DCFSA, and her employer does not re-imburse her for the amount she paid in. She used all of it to pay for daycare. Her total daycare bill for the year was $27,121. When she plugs in the total $27K in daycare expenses for the year, TT indicates she had $5K in eligible dependent care expenses, it subtracts $5K in dependent care benefits from her W2, leaving her with $0 listed for her child and dependent care tax credit. Does that sound correct? Trying to determine if it's better for her to contribute to the DCFSA or just pay it all out of pocket and get the child and dependent care tax credit.
