Why is my dependent care credit only $200, not $1200? I had over $15k in child care costs for my two children (ages 3 and 1). I received $5k in dependent care FSA funds.

As best I can tell, I have enough income that I should be able to get a credit of 20% of $6000, so why would TT only show $200?

1450

Level 15

Jan 18, 2023 9:57:39 AM

Check back. I will page @Mike9241 to see if he has any input.

Level 15

Jan 18, 2023 12:15:18 PM

see a tax pro. that loan exceeds the de minimus threshold and you are subject to IRC 7872.

Treatment of loans with below-market interest rates

Level 1

Jan 18, 2023 12:22:38 PM

Something seems like it got messed up with this forum... the question was about dependent care credit and dependent care FSA, not loans.

Level 15

Jan 18, 2023 12:27:06 PM

The credit is correct. The FSA benefit is subtracted from the overall allowable total. If you provided care for 2 or more children, the maximum eligible cost is $6000. Since you received a $5000 tax-free FSA, the amount of remaining expenses eligible for the credit is $1000. $200 is a 20% credit, which is the correct credit of your income is over $35,000.

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Why is my dependent care credit only $200, not $1200? I had over $15k in child care costs for my two children (ages 3 and 1). I received $5k in dependent care FSA funds.