Child Tax Credit and Payflex Accounts

[Loly12313]

Why does using a payflex account to pay for dependent care make you ineligible for Child Tax Credit? My work does not provide on site childcare. I use these pre-tax dollars to pay for child care for the whole year (includes summer camps not just after school care). However, every time I file taxes, it says I am not eligible even through I spend thousands on child care. 

[xmasbaby0]

You are already using untaxed money to pay for your childcare.  You are not allowed to "double dip" and get a tax credit for the money spent on childcare.

[Loly12313]

Thank you for this. What if the cost of childcare is more than what is placed on Payflex. EX: State limits amount of money to place on Payflex and is $4,000, but the cost of childcare for the year is $8,000. Would you then qualify for the tax credit?

[carolineb]

Hello @Loly12313 !

Child care is certainly expensive, and having a payflex account does help with that expense. However, the IRS limits the amount of child care paid to $3000 per child in order to be eligible for the Child and Dependent Care Credit.  So if you are paying $10000 per child, you are limited to taking only $3000.  If you're using funds from a DCB account to cover childcare or dependent care, you cannot claim the credit for those same expenses. Since DCBs offer up to $5000 of pretax dollars, this is still a better deal for you tax wise. 

This link may be helpful to you: 

Child and Dependent Care Credit & flexible benefit plans

[xmasbaby0]

No.    You only get up to a $3000 child and dependent care credit  per child--- and you are already getting more than that in money that has not been taxed.  You cannot double dip.