topic Thanks for explaining it. in Deductions & credits

Fsa dependent care

dankesh — Sat, 01 Jun 2019 01:17:02 GMT

can i claim pre school fees expense as FSA child care ?

Scenario - 1, Can i claim if my wife is not working or studying ?

Can i claim if my wife is studying a course ?

Expenses below kindergarten are qaulifying expenses. You...

Opus 17 — Sat, 01 Jun 2019 01:17:05 GMT

Expenses below kindergarten are qaulifying expenses.

You must pay for care so that you and your wife can work, or be a full time student, or be looking for work.

If your wife is a full time student (determined by the definition of full time according to the school she attends) then she is imputed $250 of income for each month in which she is a student. That defines the maximum expense eligible for the credit. In other words, if she is a full time student for 12 months, then you can take the credit on up to $3000 of qualifying expenses. But if she is only a full time student for 5 months, then the maximum amount of expenses eligible for the credit is $1250 (and the credit amount is between 20-30% of eligible expenses.)

If she is looking for work, you can use the credit, but the maximum amount of the credit depends on her earned income from working. That means that if she earns at least $3000, you can claim the maximum credit for the whole year even though she may have only worked for part of the year. But if she looks for work but never actually earns any money, you can't claim the credit.

Thanks for explaining it.

dankesh — Sat, 01 Jun 2019 01:17:09 GMT

Thanks for explaining it.

The rules are similar for the FSA. The maximum amount of...

Opus 17 — Sat, 01 Jun 2019 01:17:11 GMT

The rules are similar for the FSA. The maximum amount of FSA that you could use tax-free is $5000 or your wife's earned income, whichever is lower. If you are expecting that she might have income in 2017, you could sign up for the FSA now. If she ends up having no earned income of her own, you are not eligible to use an FSA and the amount spent on care will be added back to your taxable income. But there is no penalty. So if she might have income, you could do the FSA just in case, and if she ends up not having income, then you are no worse off than just not doing it.