Most Popular Questions
Does a DCFSA or the Dependent Care Tax Credit provide better savings?
It depends on your particular tax situation. You may apply up to $3,000 of expenses paid in a year for one qualifying individual, or $6,000 for two or more qualifying individuals to your taxes through the Dependent Care Tax Credit.
If you have two or more dependents and your household adjusted gross income is less than $43,000, you might find the federal tax credit to be more beneficial. However, if your household adjusted gross income exceeds $43,000, it is likely the DCFSA will provide greater tax savings
See Dependent Care Tax Credit Worksheet (PDF) to help you determine which option is best for you.
If the federal tax credit is a better option, you will need to file IRS Form 2441, "Child and Dependent Care Expenses" (attached to Form 1040) (PDF), when you file your Federal Income Tax return. The amount of your DCFSA election for the benefit period will appear in box 10 on your W-2 form.
Please seek guidance from your tax advisor to determine which option is best for you.