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Level 2
posted Feb 4, 2023 2:01:24 PM

Depcare FSA

We just had our first child and I want to start contributing to the max allowed limit of $5K for Depcare FSA. We are MFJ and I wanted to check if we both have to put $2500 each through our employers or I can put the whole $5K myself since we are MFJ

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1 Best answer
Expert Alumni
Feb 4, 2023 3:53:47 PM

You can contribute just yourself and claim it on your MFJ return as long as you meet the requirements to claim. The credit is worth as much as 35% of your qualified expenses, up to $3,000, (for one qualifying person), and $6,000 (for two or more qualifying persons). Your percentage depends on your AGI, with the higher percentages applying to lower incomes and vice-versa.

 

To qualify for this credit, you must meet all of these criteria:

  • You (and your spouse, if filing jointly) must have earned income
    • The earned income requirement for one spouse is waived if they were a full-time student or disabled (if they lived with the other spouse for more than 6 months in 2022)
  • You paid caregiving expenses so that you (and your spouse, if filing jointly) could work or look for work
    • The work/look for work requirement for one spouse is waived if they were a full-time student or disabled (if they lived with the other spouse for more than 6 months in 2022)
  • You paid a caregiver to care for a Qualifying Person. The caregiver can't be:
    • Your spouse
    • Your dependent
    • Your child if they were under 19 on the last day of 2022, even if not your dependent
    • The parent of the Qualifying Person, if the Qualifying Person is your child under the age of 13 during 2022
  • Your filing status is not Married Filing Separately (except under certain circumstances)
  • You can provide the care provider's name, address, and their SSN, ITIN, or EIN on your return (unless it's a tax-exempt organization)

4 Replies
Expert Alumni
Feb 4, 2023 3:53:47 PM

You can contribute just yourself and claim it on your MFJ return as long as you meet the requirements to claim. The credit is worth as much as 35% of your qualified expenses, up to $3,000, (for one qualifying person), and $6,000 (for two or more qualifying persons). Your percentage depends on your AGI, with the higher percentages applying to lower incomes and vice-versa.

 

To qualify for this credit, you must meet all of these criteria:

  • You (and your spouse, if filing jointly) must have earned income
    • The earned income requirement for one spouse is waived if they were a full-time student or disabled (if they lived with the other spouse for more than 6 months in 2022)
  • You paid caregiving expenses so that you (and your spouse, if filing jointly) could work or look for work
    • The work/look for work requirement for one spouse is waived if they were a full-time student or disabled (if they lived with the other spouse for more than 6 months in 2022)
  • You paid a caregiver to care for a Qualifying Person. The caregiver can't be:
    • Your spouse
    • Your dependent
    • Your child if they were under 19 on the last day of 2022, even if not your dependent
    • The parent of the Qualifying Person, if the Qualifying Person is your child under the age of 13 during 2022
  • Your filing status is not Married Filing Separately (except under certain circumstances)
  • You can provide the care provider's name, address, and their SSN, ITIN, or EIN on your return (unless it's a tax-exempt organization)

Level 2
Feb 4, 2023 4:07:40 PM

Thanks a lot.

 

Understood the credit % point.

 

i was referring to the $5000 pre-tax dollars that one can put in a depcare FSA.


can I do both? I.e. contribute 5K pretax from my payroll and then also available tax credits upto 3K as you said?

Expert Alumni
Feb 4, 2023 4:31:39 PM

Yes, the pretax dollars you contribute are factored into the dependent care credit when you enter your W-2.  Later, you can enter the amounts paid for dependent care to a qualified caregiver and TurboTax then populates your allowable credit.  It may not be the full $3,000 depending on other factors, but TurboTax will report the highest credit you are allowed given your specific situation.

 

@puneetswami9

Level 2
Feb 6, 2023 3:42:19 PM

Thanks a lot. Very clear