daycare mommas

annam829 · August 2011

hi everyone

i was just curious if anyone had experience with actual daycare and the tax break you get on your return? thanks for any info

annam829 · August 2011

i found the actual info if anyone was curious...

http://taxes.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=taxes&cdn=money&tm=39&gps=500_422_1676_797&f=00&tt=13&bt=1&bts=1&zu=http%3A//www.irs.gov/pub/irs-pdf/f2441.pdf

it SUCKS to be working to pay daycare

kross605 · August 2011

I dont know for sure but I think the tax deduction is something like a max of $500. I think thats per household but that might be per child. When I was debating between participating in a dependent care FSA or not participating and taking the tax break my accountant suggested doing the FSA. With an FSA, the "tax break" you get is in the thousands of dollars (depending on your tax bracket and total daycare expenses etc) which is much higher than the max tax deduction you can take off of your yearly tax filing for dependent care. Also, with an FSA, you can still take the tax deduction on any amount you pay for daycare over the FSA limit (currently the max you can put into an FSA is $5k....much lower than most people's yearly daycare expenses). Does that make any sense? Hopefully theres an accountant around that will post, but this my unofficial knowledge!

eSynergy · August 2011

All I know is I have the FSA (flexible-spending acct) through my work and I get $5000/year tax-free. I get a little bit taken out of each paycheck, then I submit my daycare receipts to the FSA peeps to get reimbursed. You save a few hundred dollars, at least.

Of course daycare costs more than that, so I think you can get more back when you do your taxes. I completely forget though, how much we got back.

ering1115 · August 2011

i completely forgot about the dependent care fsa at my office! ugh. that is something to email hr about this week.

we have little man at the ymca so there is an additional tax back because it is a non-profit. definitely not the entire amount but a percentage.

larrysdarling · August 2011

eSynergy:
All I know is I have the FSA (flexible-spending acct) through my work and I get $5000/year tax-free. I get a little bit taken out of each paycheck, then I submit my daycare receipts to the FSA peeps to get reimbursed. You save a few hundred dollars, at least.

Of course daycare costs more than that, so I think you can get more back when you do your taxes. I completely forget though, how much we got back.

We have the same thing. You can't claim both, it's either the tax credit or the FSa. I think the general guideline is higher incomes benefit more when you use the FSa.

kross605 · August 2011

ering1115:
i completely forgot about the dependent care fsa at my office! ugh. that is something to email hr about this week.

we have little man at the ymca so there is an additional tax back because it is a non-profit. definitely not the entire amount but a percentage.

Just FYI, I THINK you can only sign up for the FSA for a January start so its a good idea to talk about it now and get it all set up, but you probably cant actually start participating until January. I think thats the actual federal rule but Im not certain.

Similarly, are you sure about the additional tax back due to daycare being a non profit? We also send dd to a non profit daycare and our accountant said that since we are receiving a service for the fee we pay thats not a deductible "donation" to a non profit. So we get the $5k via the FSA tax free and then anything above $5k we can take as a deduction on our taxes as childcare expenses but we dont get anything additional because of the daycare being a non profit. Do you know some loophole I dont?! (not being snarky, just honestly interested in saving tax money!)

daycare mommas

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