We set aside $5,000 last year in a dependent-care flexible spending account through work to pay for my son’s child-care expenses. However, we ended up with out-of-pocket expenses in excess of $5,000. Can we also take the child-care credit when we file our tax return?
No. Because you are paying for care for only one child younger than age 13, you can’t take the child-care credit for the excess expenses. If, however, you were paying for two or more kids, you would be able to claim the credit on up to $1,000 of child-care expenses beyond the $5,000 covered by your flex plan.
The child-care credit applies to up to $3,000 of child-care expenses for one child or up to $6,000 for two or more. The most you can run through a flex plan, regardless of the number of children involved, is $5,000. So for a family with two or more qualifying children who max out on the flex plan, up to $1,000 of additional expenses could qualify for the credit. Because the credit ranges from 20% to 35% (depending on income), that could knock $200 to $350 off the family’s tax bill.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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 cost of a nanny, day care or preschool counts for the child-care credit or a dependent-care FSA, as does the cost of before-school and after-school care and summer day camp for kids younger than 13 if the expense is incurred so that you and your spouse can work. You can also qualify if one spouse is a full-time student and the other is working. For more information about the child-care credit, see Tax Break for Summer Camp.
To calculate the child-care credit you can claim -- whether or not you receive dependent-care benefits from your employer -- see IRS Form 2441. Also see Publication 503, Child and Dependent Care Expenses, especially the “reduced dollar limit” section on page 11 about coordinating the dependent-care FSA and the child-care credit.
-
3 Ways High-Income Earners Can Maximize Their Charitable Donations in 2025Tax Deductions New charitable giving tax rules will soon lower your deduction for donations to charity — here’s what you should do now.
-
An HSA Sounds Great for Taxes: Here’s Why It Might Not Be Right for YouHealth Savings Even with the promise of ‘triple tax benefits,’ a health savings account might not be the best health plan option for everyone.
-
10 Retirement Tax Plan Moves to Make Before December 31Retirement Taxes Proactively reviewing your health coverage, RMDs and IRAs can lower retirement taxes in 2025 and 2026. Here’s how.
-
The Original Property Tax Hack: Avoiding The ‘Window Tax’Property Taxes Here’s how homeowners can challenge their home assessment and potentially reduce their property taxes — with a little lesson from history.
-
Three Critical Tax Changes Could Boost Your Paycheck in 2026Tax Tips The IRS predicts these tax breaks may change take-home pay in 2026. Will you get over $1,000 in tax savings?
-
What’s the New 2026 Estate Tax Exemption Amount?Estate Tax The IRS just increased the exemption as we enter into a promising tax year for estates and inheritances.
-
IRS Updates 2026 Tax Deduction for People Age 65 and OlderTax Changes Adjustments to the extra standard deduction can impact the tax bills of millions of older adults. Here are some new amounts to know for 2026.
-
IRS Reveals New 2026 Child Tax Credit and other Family Credit AmountsTax Credits Key family tax breaks are higher for 2026, including the Earned Income Tax Credit and the Adoption Credit. Here's what they're worth.
