At the present time, and unless Congress changes the laws again, the maximum dependent care credit is $6000 of expenses if you are paying for the care of two or more qualifying children, and the maximum dependent care FSA is $5000.
@sm3
You don’t give enough information to answer the question.
First, how many qualifying children do you have? A qualifying child for the child and dependent care question is under age 13 and lives in your home more than half the nights of the year. It is not actually technically required that you pay for care for both children, because form 2441 will operate if you enter a dollar amount for one child and zero dollars for the other child, but you must have two qualifying children to list in order to use the credit on up to $6000 of expenses.
Next, as pointed out, school tuition is eligible for the child care credit if the child’s age kindergarten or less. If the child is over kindergarten age, tuition is not eligible as a dependent care expense.
if we assume that you have two qualifying children to list on form 2441, and your Montessori expenses qualify as dependent care, then, if you list the entire $10,000 of qualifying expenses this is what will happen.
First, any expenses paid from an FSA will be subtracted from the eligible credit amount. This is a maximum of $5000. Any remaining expenses can be applied for the credit. Since you will have listed more than $6000 of expenses but the maximum allowable expense is $6000, you would claim an additional tax credit of 20% of $1000, or $200. If you had no FSA at all, you would claim a credit of 20% of $6000, or $1200 total.
If an FSA is available to you and it is not too late to sign up, the FSA will give you a better tax break than the credit at your income level, because the FSA will save you 31% plus your state income tax, while the credit would save you 20%. (The FSA would save you 24% federal income tax and 7.65% Social Security and Medicare tax.)
