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Yes. The tax credit is only better for those with low incomes (2021 not withstanding)

Second question: only if you have two children

Regarding the credit, I think you’re in the phase out range for the credit, but don’t worry about it. It’s not like you’re going to give the child back or do anything differently, it is what it is, your tax software will figure it out when the time comes.

If someone is on leave- don’t think you can claim Dependent care or use DCFSA during that time. So that is for this year though, not next.

Congrats on the baby!

For the love of all things holy please don’t forget about the money. I’ve had grown people cry because they forfeited $5000 at the end of the year because they had no clue what they signed up for.

I’d also recommend to see if your provider has a DCFSA claim form that all you need to do is supply a filled out form with a signature of the provider. Literally bypasses the need for itemized receipts like you normally would need. You can submit it January 1st for the full balance of the account and it will get approved in full and paid out throughout the year.

Convinced a coworker to do it, it’s taken out of his paycheck on Friday, and he gets reimbursed for it on Mondays

> Assuming one of our employers offers it, we should max out an FSA for day care, right?

Yes.

> Can we also claim any of the dependent care credit (e.g., $1000 to max out the $6000 total).

If you have two or more kids, yes. If you only have one kid, the dependant care credit is only $3k, so nothing extra to claim there

> I think you’re in the phase out range for the credit

No, its uop north of $400k.

The temporary expanded credit in 2021 was lower ($150k AGI if I remember right)

> I’d also recommend to see if your provider has a DCFSA claim form that all you need to do is supply a filled out form with a signature of the provider. Literally bypasses the need for itemized receipts like you normally would need.

YMMV, but my childcare issues a receipt everytime I pay through an online portal. Don't need to go through the effort of getting something "special" signed each time. The form is nice if there isn't already something though (home based daycares come to mind)

If the daycare provides itemized receipts, awesome. Totally works, but believe me being on the other end of that call telling people that we denied the claim because of insufficient info on the receipt….my goodness please use the form and don’t shoot the messenger when I’m forced to deliver bad news, if it were up to me I’d be approving them and moving on lol!

Its also super dependant on the FSA provider, too. I've had some that were super strict and would take weeks to process. My current one, if I am submitting for the same amount with the same provider each week, it gets auto-approved instantly.

That’s the top of the phase out I think where it ends completely. The start is lower than that I believe.

We had that too, but then the merchant changes something in their system and then it switches to requiring a receipt. Then the client calls in mad because it was approved just fine 10 other times and now it magically needs a receipt 🥲

My goodness I’m glad I left that team lol. I’m happy it all works for you though truly. I’m sure the majority of people it works fine with. Of course I’m going to get the bad examples because people aren’t going to call in to say “nothings wrong! Carry on!”

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Yes, at that income you get more tax benefit from the DCFSA vs. the dependent care credit.

• The credit saves you 20% on up to $3000 (for a single kid) of your qualified expenses, subtracted from your tax liability.
• The DCFSA lets you put away up $5000, getting your a deduction on your taxable income straight on your paycheck. That contributed money is ignored for federal income tax (24% at your income) + payroll tax (7.6%, though if you or wife are above the social security wage cap, your effective rate may be lower) + state income tax (if applies).

If you have more than one kid, you can benefit from a mix of the two. For two dependents, the cap on "qualified expenses" for the care credit is $6000 (and annoyingly doesn't increase for kids 3+). To prevent "double dipping" on tax savings, any "employer care benefit" you receive (like a DCFSA) is subtracted from that capped amount. With two kids, that ends up leaving up to $1000 of expenses "left over" after taking away the DCFSA that you can still use for the care credit, getting you a $200 tax savings. With a single kid, the $5k DCFSA allowance is > the $3k capped expense, leaving $0 to get any credit against.

As an FYI, the rules for the dependent care credit and DCFSAs were completely different in 2021, but those have expired. There were changes enacted as part of the "American Rescue Plan", but that was a one-year-only thing. So if you're looking up information, make sure that what you're looking at is specifically for 2022 (or for / before 2020, which is what the rules reverted to).

Nope, think you are still confusing with the expanded 2021 credit. The "normal" one, the start of phaseout is that high