My kid goes to day care. We claim the deduction. .20 on the total amount paid. In addition to the fees paid, we are also required to "bring snack" for all the kids once every couple months. Over the course of a year, it works out to about 1/4 of our monthly fees.
Is this deductible under the day care expense deduction?
Thanks G
If billed by and paid to the child care provider, deduct; else, don't.
,
Technically, there is no deduction. Child care while you work (or go to school) is a CREDIT.
I agree with Mr. Stussy.
Unless of course it is reimbursed through the employer and shown in W-2 box 10, then it is a deduction (exclusion), not a credit. Refer to page
2 of Form 2441.In the OP's case, given that he is referring to the lowest credit rate (20% of qualified expenses), he's probably using the credit.
The employer-related deduction is a much better deal for many, as it is based on as much as $5K for even with one child (instead of $3K for the credit), and it not only is excluded from income tax (benefit equal to your marginal federal tax rate and state too, if applicable) but also from FICA taxes. So, the deduction is worth *more* as your income goes up, not less as with the credit.
-Mark Bole
What you describe seems to be the daycare FSA. Isn't the $5,000 also free of the employee's portion of FICA tax? Also, in 2013 will the maximum amount you can put into the daycare FSA drop to $2,500, and thereafter be adjusted for inflation (part of the healthcare bill), or does only apply to normal FSA accounts?
In addition to the other replies, the credit is based on the first 3k of expenses per kid, up to 2 kids. It's likely that the base daycare expense is already over 3k.
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