Flexible Daycare Expense or Child Care Credit?

I just started work and found out the my employer offers a flexible daycare expense account. However, I will spend more in daycare for my two kids than the max allowed. So I am wondering if it better to use the child care credit on my taxes at the end of the year or to use the flexible acct? Any thoughts would be appreciated.

Flexible Daycare Expense or Child Care Credit?

The maximum for a flex plan is $5000. And these are pre-tax deductions. The maximum child care credit is $6000 post tax.

And actually, because the $5000 flex plan is a pre-tax deduction, it sames you more money at tax time.

Flexible Daycare Expense or Child Care Credit?

Money set aside into an FSA for daycare expenses is limited to $5,000. This $5,000 will save you around $1,633 in federal taxes if you are in the 25% tax bracket. You have to decide if your tax savings from the childcare FSA will be greater than the federal child and dependant care credit. The federal child care and dependant credit is only $600 for one child and $1,200 for two or more children.