Child-Care Tax Breaks for Working Parents
Working parents may be able use their flexible spending account along with the child and dependent care credit to save on taxes when paying for child care.

Question: I used my dependent care flexible spending account at work to pay $5,000 of my children’s day-care expenses. But with two kids under age 5, our total child-care bills in 2018 were much more than that. Can I take the dependent care tax credit for our additional child-care expenses?
Answer: You won’t be able to take the child and dependent care credit for all of your extra expenses, but you may be able to use the credit for up to $1,000 of those costs.
If you have two or more kids under 13 and pay for child care while you and your spouse work or look for a job (or if one of you is a full-time student), you can claim the child-care credit for up to $6,000 in child-care expenses, including day care, preschool, a nanny or babysitter who watches your kids while you work, before- and after-school programs, and summer day camp. But if you used the maximum $5,000 from your dependent care account at work tax-free for child-care costs, that counts toward the $6,000 limit and you can count only the extra $1,000 toward the child-care credit. (The $5,000 FSA limit is per couple – even if both of your employers offer the plans – and isn’t based on the number of children you have.)

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The dependent care tax credit is worth 20% to 35% of the first $3,000 in eligible child-care expenses if you have one child, or up to $6,000 in child-care expenses if you have two or more children. The percentage is based on your income. You’ll qualify for the 35% credit if your income was $15,000 or lower in 2018. The credit gradually decreases as earnings rise, dropping to 20% of eligible expenses once income reaches $43,000 or more. So if you paid $5,000 in child-care costs from your FSA at work and still had an additional $1,000 in expenses that count toward the credit, you can cut your tax liability by $200 to $350, depending on your income.
See IRS Publication 503, Child and Dependent Care Expenses, for more information and a list of credits at each income level.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.
-
How Five States Are Worse Off After Trump’s Cuts to SNAP and Medicaid
State Tax Due to Trump's new tax law, some states will experience a greater impact than others.
-
Happiness Improves at Age 50, Right? Maybe Not for Everyone
New thinking about how happiness changes over our lifetimes shows that one group in particular gains the most contentment after age 50.
-
Tariff Stimulus Checks Coming? New Proposal Seeks Tax Rebates for U.S. Workers
Tax Breaks A new GOP bill proposes to send $600 in tariff rebate checks to eligible taxpayers. Is there a catch?
-
Biggest Winners and Losers in Trump's New Tax Plan
Tax Law Trump’s mega tax overhaul, known as the ‘One Big Beautiful Bill,’ has distinct winners and losers. Which group do you fall into?
-
Five Ways Trump’s 2025 Tax Bill Could Boost Your Tax Refund (or Shrink It)
Tax Refunds The tax code is changing again, and if you’re filing for 2025, Trump’s ‘big beautiful’ bill could mean a bigger refund, a smaller one or something in between next year. Here are five ways the new law could impact your bottom line.
-
New SALT Deduction Could Put Thousands Back in California Homeowners’ Pockets
Tax Breaks The federal state and local sales tax (SALT) deduction cap is higher this year, and could translate into bigger savings for Golden State homeowners.
-
Money for Your Kids? Three Ways Trump's ‘Big Beautiful Bill’ Impacts Your Child's Finances
Tax Tips The Trump tax bill could help your child with future education and homebuying costs. Here’s how.
-
New Cap on Gambling Loss Deductions Begins Soon: What to Know Now
Tax Changes A gambling losses tax deduction cap in Trump’s “big beautiful bill” is causing an uproar. Here’s what you need to know.
-
Key 2025 Tax Changes for Parents in Trump's Megabill
Tax Changes Are you a parent? The so-called ‘One Big Beautiful Bill’ (OBBB) impacts several key tax incentives that can affect your family this year and beyond.
-
Elon Musk and Most Taxpayers Don't Like What's in Trump's 'Big Beautiful Bill'
Tax Policy President Trump is betting big on his newest tax cuts, signed into law on July 4. But not everyone is on board.