This example is a great explanation: There is a maximum expense that can be attributed to one child, or to two or more children. It's $3,000 for one child and $6,000 for two or more children. If you contribute $3,000 or more to your FSA and you have the one child, then there are no dollars left to use for calculating the credit. If you have two or more children and spend $6,000 on them and also have $5,000 contributed to your FSA, then the first $5,000 is the limit for the FSA, which leaves $1,000 that can be applied to the credit.
The total credit is $6,000 max, with or without an FSA.
See this link for further details: Child and dependent care expenses
Have an amazing day. Evelyn M (CPA 20+ years)
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