topic Dependent care FSA tax saving for AGI above $120k? Comparing with Child Care Tax Credit in Deductions & credits

Dependent care FSA tax saving for AGI above $120k? Comparing with Child Care Tax Credit

bill_sg — Tue, 04 Jun 2019 19:41:34 GMT

I understand that if your AGI is higher than $120k, you can't claim total $5k for dependent care FSA for married filed jointly or $2.5k for single or married filed separately. Can you provide the formula how much tax you can save for high income? Let's assume you have AGI $200k with one child filling for married filed separately, Dependent Care FSA or Child Care Tax credit can save more tax? Thank you

I don't believe there is an income limit on using an FSA...

Opus 17 — Tue, 04 Jun 2019 19:41:36 GMT

I don't believe there is an income limit on using an FSA for dependent care. There may be limits if the covered person is a "highly compensated employee" for their particular employer, but that's not a hard dollar limit, it depends on the average salary of the particular employer. In general, with the changes to the tax brackets, the FSA will be better for anyone whose income is more than about $40,000, assuming they live in a state with state income tax.