How best to account for child care expenses in taxes?
August 19, 2013 10:05 AM Subscribe
I'm putting my daughter in preschool and want to know the cheapest way to pay for it.
posted by tylerkaraszewski to work & money (2 answers total) 1 user marked this as a favorite
Assume child care costs $12,500 per year. My employer allows me to contribute up to $5,000/year to a Dependent Care Spending Account FSA. I am in the 25% tax bracket filing as a "qualifying widower". That still leaves me with approximately $7,500 in child care expenses for the year. I should be able to claim a child care tax credit for 20% of up to $3,000 of that, which is a $600 credit. Is there anything else I can do to save more money on child care than that?
I will ask my accountant about it before tax season, but he can be difficult to reach sometimes, so I'm looking for a reasonable estimate.