Tax Question regarding dependent care (child care)?

I have a one year old son in childcare. My wife can use some of her cafeteria benefits to pay for this childcare. Her employer has indicated that this benefit would be taxed. I am wondering if I can then get a dependent care tax credit at the end of the year when I file my taxes. If so, how is that done, and how much can I claim?

Tax Question regarding dependent care (child care)?

Child care cafeteria benefits are generally not taxable, they are usually deducted from W-2 on pre-tax basis, and in this case would be reported on a box on the W-2. That amount would not a deductible child care expense. But usually you are better of taking advantage of as many pre-tax deductions from paycheck as you can.

Tax Question regarding dependent care (child care)?

You can claim any childcare cost but your child care provider has to claim it too.(if they don%26#039;t they will get in trouble not you) and it is all on the forms you fill out if you are like me and go have someone do them for you then just make sure you tell them. Depending on how much you pay will depend on how much you get back

Tax Question regarding dependent care (child care)?

Some of it--Check out this link:

http://www.irs.gov/pub/irs-pdf/f2441.pdf

Tax Question regarding dependent care (child care)?

An employee can use up to $5,000 of employer-provided dependent care benefits (DCB) without paying income tax on the benefits.

If $3,000 or more of DCB are used, then it is not possible to also claim the Dependent Care Tax Credit.

If less than $3,000 of DCB are used, and after-tax dollars are also spent for dependent care, then a credit is possible on the after-tax dollars that bring the total dependent care expenses up to $3,000.

In other words, if your wife had $2,000 in DCB, you could get a credit on up to $1,000 of expenses you paid out of pocket. This assumes you file MFJ. If you do not live with the child and file MFS, you cannot get any credit for dependent care, only the mother can.

The credit is between 20% and 35% of your after-tax expenses depending on your income. The credit only reduces tax that is owed.

Before your wife signs up for DCB you need to figure out if taking the DCB is a better deal for you than taking the credit. This depends on your income and the total cost of care.