I have the same situation.

2018 - $1200 child care credit (Schedule 3, Line 49)

2019 - only getting $200 child care credit

Our situation has changed very little.  In both years we did a $5,000 FSA for dependent care and had > $6,000 in child care expenses for 3 kids.

I don't understand why it is dropping from $1200 to $200.

For both years, 2018 and 2019, the credit for Child and Dependent Care is 20-35% of the expense. 

If, for both years, you had about $1,000 in un-reimbursed expenses, the most the credit could be would be $350.

I assume you're in the 20% bracket, so the credit would be $200.

I would also assume the 2018 credit is not correct. You would need to look at the 2018 Form 2441 to see what was reported as expenses. 

Sorry @Opus 17  to bring up an old topic, but it seems to be impacting me for 2022. Could you point to some IRS documentation that states this?

As I understood it, you can fully take advantage of both a dependent FSA and child care tax credit if you have  enough expenses to fully cover both. In other words, if you have more than $11000 in dependent care for two children, you can get the (full $5k in FSA) and (the full $6000 x times .2 and .35 depending on AGI)

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@EvanMal wrote:

Sorry @Opus 17  to bring up an old topic, but it seems to be impacting me for 2022. Could you point to some IRS documentation that states this?

 

As I understood it, you can fully take advantage of both a dependent FSA and child care tax credit if you have  enough expenses to fully cover both. In other words, if you have more than $11000 in dependent care for two children, you can get the (full $5k in FSA) and (the full $6000 x times .2 and .35 depending on AGI)

 

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Sorry, it never worked that way.

If you download a copy of form 2441 and the instructions and work through the form, you will see how the calculation occurs, although I don't know if the limitation is explicitly explained there.

https://www.irs.gov/forms-pubs/about-form-2441

Also see "Dependent Care Benefits" on page 11 here, which does explain the limitation in detail.

https://www.irs.gov/pub/irs-pdf/p503.pdf

For what it's worth, the FSA is far more valuable than the credit, for anyone whose income is more than about $35,000.