January 05th, 2016
TAX TIP OF THE DAY... save up to $1k by using a DAYCARE flexible spending account.
Which is better? 1) Daycare tax credit on your tax return OR 2) daycare FSA at work. For most people, the FSA is best and saves you up to $1,033 more per year. But the true answer varies based upon factors: # of children, daycare amount, your tax bracket, W-2 amount.
A daycare FSA... The employer takes funds directly from your paycheck and places into a special daycare bank account with your name on it. The money is pre-tax which means it reduces your W-2 taxable wages saving you federal income tax, social security tax and medicare tax. There are more +/- details.
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If you need any help... www.baboiancpa.com
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David S. Baboian, CPA