Turbotax is saying that we don't qualify for the Child care credit. We contributed $4750 to the dpendent care FSA and our total expense was $6,109.

[dushyantkumar1]

Hi,

I paid for $6109 on my child’s after school care. Out of that, I got $4750 reimbursed via DCA (dependent care FSA). The turbotax is not allowing me to claim the credit for remaining $1359. It says 

“Based on your tax situation, the maximum credit you qualify for is $3,000. Before you can use your $6,109 in care expenses to get this credit, the IRS reduces the $3,000 limit for each dollar received from your employer for childcare benefits. Since you received $4,750 in childcare benefits, the $3,000 is reduced to $0.”

Could you please confirm if this is correct?

[BillM223 · Accepted solution]

Yes, this is absolutely correct.

For a single child it is difficult to get a tax credit for Child and Dependent Care. A better strategy for you is probably to contribute to the FSA. But even at that, it is difficult not to spend a gazillion dollars for which you will get little benefit.

[dushyantkumar1]

Thanks for the explanation.