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You cannot "double-dip", which is to receive both tax benefits for the same expenses. So, in general, you can claim either the Dependent Care FSA or the Dependent Care Tax Credit on your income taxes.
However, you may be able to claim both tax benefits if your expenses exceed $5,000. If you have two or more children, ask your tax advisor about whether you can set aside the first $5,000 pre-tax into a Dependent Care FSA and claim up to $1,000 of remaining expenses for the Dependent Care Tax Credit.
If you have one (1) child, the $5,000 available through the Dependent Care FSA is probably more generous than the credit from the $3000 limit imposed by the Dependent Care Tax Credit.
Both the Dependent Care FSA and tax credit have the same eligibility requirements.
Did you know...? Qualified expenses for an elderly relative who is your dependent may be eligible for the dependent-care FSA or tax credit, too.
For reference, see IRS Publication 503, Child and Dependent Care Expenses.
Last updated 9/07/18
