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Need details on FSA Dependent Care Account...?


If I'm planning to do a dependent care FSA account, is the following correct? The $ I put in the account are pre-tax, I am reimbursed by giving receipts to my FSA program and receiving a check, etc. back. At the end of the year I get a receipt for dependent care, I can deduct that on my taxes. So, essentially I'm getting a double deduction?? Well, kind of??? Thanks for your help!

No you may not get a double deduction. Generally you an pick either the tax credit on your taxes or to use the FSA account. For most people the FSA account will be better. The one potential disadvantage of the FSA is that you must estimate your expenses ahead of time. You will lose any extra contributions that are not re-imbursed from the account. However day care expenses are pretty predictable, and often the expenses exceed the max for FSA accounts(5K for one child and I think 10K for multiple).
If you do have expenses in excess of the amount you put in the FSA, you may be able to use the tax credit depending on the amount you contributed.

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