Dependent Care Account and Childcare Expenses

[ugadawgs311]

If my wife and I had money deducted from our paychecks to deposit into a dependent care account, can we also deduct our childcare expenses we paid to the providers? I'm guessing not, since we typically reimbursed ourselves for those expenses with money from the dependent care account. Thanks!

[MinhT1]

There is a dollar limit on the amount of your work-related expenses you can use to figure the Child and Dependent care credit. For 2024, this limit is the lower of actual expenses or $3,000 if you had one qualifying person, or $6,000 if you had two or more qualifying persons.

If you received dependent care benefits that you exclude or deduct from your income (such as a contribution to a Dependent Care FSA), you must subtract that amount from the dollar limit that applies to you.

Please read this IRS publication page 12, for more information.

[ugadawgs311]

Thanks for the info. I had 2 children that received childcare, so my limit would be $6,000. My wife had $5,000 deposited into her dependent care FSA, so does that mean we could deduct $1,000 in childcare expenses?

[Opus 17]

You must list the expenses in Turbotax to reconcile the dependent care benefit on your W-2.  Include the name, address and tax number of the provider, the qualifying expenses (all of them) and your qualifying children, and let the program do the work.

The maximum that can be deferred in a DCB account is $5000.  The maximum expenses eligible for a credit are $3000 for one child and $6000 for 2 or more children.  So if you paid $8000 for care for one child and had a $5000 DCB, that;s all you get.  If you paid $8000 for the care of two children and a $5000 DCB, you can get the credit on the next $1000 (to a maximum of $6000).  

The program will do this all for you.

And incidentally, $5000 is the max DCB for a family.  If you each had a DCB and the total is more than $5000, the excess gets added back to your taxable income.  There's no additional penalty.