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When it comes to saving taxes on dependent care expenses, you have two options for tax savings - a Dependent Care Flexible Spending Account (DCFSA) and/or the Income Tax Credit. Please use the tables below to determine which option provides the best benefit for your specific situation. Please note that your DCFSA election amounts should be based on an estimate of your own qualified dependent care expenses.
Please add your expected monthly expenses for the five categories below as well as your income and tax information.
Dependent Care FSA Estimated Annual Tax Savings
Federal Child Care Tax Credit Estimated Annual Savings
*Maximum amount of DCFSA benefits permitted for income exclusion is temporarily increased to $10,500/year regardless of number of children because of the American Rescue Plan Act of 2021 (If married filing separately, your limit is $5,250). Income exclusion amounts for 2020 were $5,000 (or $2,500 for married taxpayers filing separately) as set by the Internal Revenue Service (IRS). See the complete regulations and list of qualified and non-qualified medical expenses in IRS Publication 503 - Child and Dependent Care Expenses.
If someone chooses to take the Dependent care tax credit it reduces the amount of tax-free reimbursements that can be received under a DCAP (i.e., expenses taken into account in calculating the Dependent Care Tax Credit cannot be the same expenses submitted to the DCAP for reimbursement) and vice versa.
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