I know the program will calculate it for you but I am just very curious how is the Dependent Care Credit calculated. So we spent in total 10,000$ in daycare for my kids in 2022. and among this 10k, we have the 5k income withheld reimbursed. how come the dependent care credit is 200$? So you use the amount of expense total minus the 5000$, then multiply a rate depending on your AGI? To get 200$ that means our rate is only 4%?
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The Dependent Care 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 adjusted gross income, with the higher percentages applying to lower incomes and vice-versa.
For example, a married couple supporting two qualifying persons who paid $6,000 in qualified expenses may qualify for up to $2,100 in credits, depending on their adjusted gross income.
For more information about the credit, please see this TurboTax Help article.
If you look at the form 2441 you will see that the max of $6K for 2 kids is first reduced by the $5K from the FSA leaving only $1K for the credit x 20% = $400 credit.
It is not figured this way ... $10K - $5K fsa = $5K x 20% = $1000 credit
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