Depcare FSA

[puneetswami9]

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

[AliciaP1 · Accepted solution]

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)

[puneetswami9]

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?

[AliciaP1]

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

[puneetswami9]

Thanks a lot. Very clear