Can I use child care as a tax deduction?

[soysauz123]

My baby was born this year and will be starting daycare soon. Work has a dependent care FSA but when I changed my benefits, for some reason the deduction did not go through. Can I deduct the expenses up to $5K on my tax return for 2012? We have a qualified provider. We don't qualify for the tax credit.

[explorer2001]

www.irs.gov
And talk to your HR department.

[formerlyak]

Before I had an FSA for dependent care available to me, I deducted the $5K in child care expenses. I don't think it is a dollar for dollar deduction though. I think there is a formula based on income and other factors if I am remembering correctly.

As explorer posted, there is more info on irs.gov and if you use something like Turbo Tax, you put the amount you spent in one input field and it figures that out for you.

[soysauz123]

Thank you! I tried irs.gov but it only talks about the fsa's and the credit. TurboTax is a great idea!

[jwright]

Check with your HR dept. Why wouldn't the deduction go through? Is it not showing up as a pretax deduction?

You can't deduct the $5,000 without it running through your payroll. You do get an extra exemption for having a dependent. There is the childcare tax credit but it is limited to $600; depending on your tax rate you are probably better off with the deduction than the credit. There aren't any income limitations on the childcare credit like there are with the actual child tax credit.

[brit1017]

Aug 22, 2012 18:40:37 GMT -5 formerlyak said:

Before I had an FSA for dependent care available to me, I deducted the $5K in child care expenses. I don't think it is a dollar for dollar deduction though. I think there is a formula based on income and other factors if I am remembering correctly.
.

I think that the formula is something like 30% of expenses can be deducted, but that phases out as income goes up (though I'm not 100% sure since we have our taxes done).