Things You'll Need

Instructions

1

Calculate total income reported annually to the IRS for the person or people claiming the child as a dependent. FSAs have no income level limitations, but the child care tax credits limit benefits to a 35 percent credit for total earnings under $15,000 annually or 20 percent for total earnings up to $45,000 annually.
2

Determine if the dependent care FSA is even an option. Ask employer if they offer an FSA. Continue this process only if FSAs are an option.
3

Estimate the amount of child care expenses that qualify for an FSAs reimbursement or tax credits. Include payment for employment related child care expenses only.
4

Figure out which option or combination of options provide the most benefits. Combining the two programs still limits the financial benefit to the maximum allowed under eligible percentage of child care tax credits.
5

Make an educated decision and complete the necessary paper work. Obtain FSA forms from an employer and child care tax credit forms (Form 2441) wherever IRS tax forms are available.