I need help with dependent care credit

[kristine_little]

My wife has a dependent care account that she contributes $5000 a year she used all but $192 this year to go toward my daughter's daycare expenses. We spent $10,530 on the cost of daycare. Why am I unable to claim the dependent care credit if only $5000 of the $10530 was paid using a DCA account?

[MichaelDC]

The maximum amount of daycare expenses you're allowed to claim is $3,000 for one child, or $6,000 for two. 

If your employer gives you money to pay child care expenses, or if you have money withheld from your pay on a pre-tax basis, you must subtract this money received from your allowable expenses. The calculation looks like this ($3000-$5000) leaving deductible expense and no daycare credit available to you this year.

A fully allowable expense ($3000) for one child would normally yield a $600 tax credit. From a positive viewpoint, think of a $5000 pretax payroll deduction at a 25% tax rate (your rate may be different) yielding $1,250 tax break.