Dependent Day Care Spending Account

[TexasBob]

Someone help me here... Daughter started daycare this week and I'm setting up 2019 benefits. Spending the full 5k wont be an issue. I also see an IRS deduction that seems the same. Thinking it may be easier to just take the deduction at tax time vs submitting expenses for reimbursement. Anyone have experience? Flying blind on this and HR was no help.. I can read the brochure

[Hooverfb]

If i remember right, the spendig account is pre-tax taken from your checks. Not reimbursal where you gotta chase it down. Unless its somethi g specific to your company. It's provided by govt, so theyre atleadt aware enough that they would suck at giving you a reimbursement id do that and then any expenses afterwards can be deductions i believe.

[tmurray]

Depends on how much you make really, I don't know the limits but it seems like the more you make the better off you are by doing the child care FSA for the full $5k. We do it and just don't touch it till the end of the year. Pay for daycare out of pocket all year long and then pull out $5k tax free money at the end of the year for paying off Christmas/Vacations... basically a tax free savings account for us.

Oh and last month I got a letter saying that I was considered a "Highly Compensated Employee" and they reduced my max from $5k to $3800 effective immediately so I'm pretty much at my max already for 2018 which sucks.

[txoutdoorsman24]

we do it every year. Its no hassle and much easier to submit for reimbursement each month instead of at the end of year. WE do our own taxes and haven't had any issues with that either.

[dpatterson1976]

Depends on how much you make really, I don't know the limits but it seems like the more you make the better off you are by doing the child care FSA for the full $5k. We do it and just don't touch it till the end of the year. Pay for daycare out of pocket all year long and then pull out $5k tax free money at the end of the year for paying off Christmas/Vacations... basically a tax free savings account for us.

I did this for several years before mine started school. Like said, it all depends on how much you make.

Putting in the max for me resulted in more money vs taking the deduction on the taxes. Also, taxable income was lower at the end of the year which resulted in a better outcome.

[dpatterson1976]

If I remember correctly, I put all of the numbers in an online tax program to see which option would be better for me.

[skinsfan]

I wouldn’t think your income mattered, you either pay taxes on the money throughout the year and are refunded at tax time or you take the money pre tax all year and don’t get to write it off at the end of the year. Maybe I am wrong but that’s what I have always thought!

[tmurray]

I wouldn’t think your income mattered, you either pay taxes on the money throughout the year and are refunded at tax time or you take the money pre tax all year and don’t get to write it off at the end of the year. Maybe I am wrong but that’s what I have always thought!

I can send you the letter I got if you want

I went back and looked at it actually, they cut my max contribution from 5k a year to $3,911.00 and I was already at about $3,800. Rather than letting me make that last payment in the next check to get to $3,911 they adjusted my per check contribution down to next to nothing so that I land at $3,911 on my last check of the year. I did not get a say in this.

[44mAG]

If you use the spending account, it basically lowers your taxable income come tax time by $5,000. Do it.

You can also get reimbursed throughout the year, to get that money back, to invest further. So it's not like you have to loan your money for a long time.

[TexasBob]

I wouldn’t think your income mattered, you either pay taxes on the money throughout the year and are refunded at tax time or you take the money pre tax all year and don’t get to write it off at the end of the year. Maybe I am wrong but that’s what I have always thought!

Oh Income matters. Always a cap on a benefit. Guess my kid doesn’t cost as much as someone else’s. Same for the child tax credit getting phased out.

Thanks everyone.


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[Wick1369]

Do it, like others have said it lowers your taxable income by $5000. We used it as a way to put money back for college. My wife would send in for reimbursement maybe twice a year then put the money in their tuition fund. Out of sight out of mind. My youngest is in Kindergarten this year so I'm SOL.

[bbqfan5909]

Interested in this and my wife's company offers FSA. From what I understand, you put money into an account similar to an HSA and can pull from it for childcare, and that money going into this account is tax free?

[tmurray]

Interested in this and my wife's company offers FSA. From what I understand, you put money into an account similar to an HSA and can pull from it for childcare, and that money going into this account is tax free?

Pretty much