(616) 776-6457 | [email protected]

Blog

Subsidize your dependent care FSA

Bill Morgan

February 25, 2020

A Dependent Care FSA (DCFSA) is a pre-tax benefit account used to pay for eligible dependent care services, such as preschool, summer day camp, before or after school programs, and child or adult daycare.

Dependent day care FSAs allow you to pay for eligible dependent day care expenses on a pre-tax basis.

Using a DCFSA to reduce your taxes

A dependent care FSA is a great strategy to reduce your tax burden.

Dependent care funds are withdrawn from your paycheck for deposit into your account before taxes are deducted, so you end up paying less in taxes and taking home more of your paycheck.

Another method to subsidize care expenses

The child and dependent care tax credit (CDCTC) provides a credit worth between 20-35% of child care costs for a child under age 13 or any dependent physically or mentally incapable of self-care.

To qualify for the CDCTC, a single parent must be working or in school. For married couples, both adults must be working or attending school.

If a family has child care expenses that exceed the amount set aside in a flexible spending account, the family may qualify for a CDCTC.

First, families calculate their allowable CDCTC expenses ($3,000 per child under age 13, up to $6,000 per family).

If this calculation exceeds the amount of salary set aside in an FSA, a parent may claim a CDCTC based on the difference.

For example, a family with two or more children can qualify for up to $6,000 of expenses to apply toward a CDCTC. If that family excluded $5,000 from salaries to pay for child care expenses in an FSA, it may claim the difference between the two ($1,000) as child care expenses for a CDCTC.

Speak with a Morgan & Associates CPA today for expertly tailored advice that’s exclusive to your tax situation.

 

 

Back to List


In three easy steps, our team can help you
find your path to a sustainable, profitable business
and more individual freedom.

 

BOSS is the answer to your back office headaches. Our cloud-based solution enables you to hand complex accounting tasks over to us. We work the numbers while providing you 24/7 access to your data—and all at a fixed, affordable monthly fee.

read more

 Our Specialties

Chiropractors

We understand that the countless number of tasks associated with running a successful practice leaves you with little time to deal with your numerous accounting and tax responsibilities. That is where ...

read more

Property Management

With proactive tax strategies and industry-specific expertise, we have a proven track record of helping property management firms succeed from...

read more

Contractors

If you contract your services as a salesperson, freelance writer, graphic designer, real estate professional, or other profession contact us to learn about the comprehensive, affordable...

read more

Nonprofits

Morgan & Associates has extensive experience in nonprofit accounting, currently providing audit and tax return services to a growing number of...

read more

mobile-graphic

Latest from Our Blog


qb-proadvisor-desktop qb-proadvisor-advdesktop qb-proadvisor-online qb-proadvisor-advonline qb-proadvisor-enterprise

Learn More

Help us. Help others.

Tell us about your experience with our firm.

Review Us
membershipmembershipmembershipmembershipmembershipmembershipmembershipmembershipmembershipmembership