Is Dependant Care pretax accounts worth it?

Does anyone on here use this account? Is the monthly tax savings worth doing this or is it better to claim it at tax time? I don't know how to calculate the monthly pretax savings. I've heard it's better to do it through out the year. Like usual, we're trying to maximize our monthly income.

Also, since I can only contribute the maximum amount of $5000, Obviously I'll be spending more than that on childcare, can I still claim the remaining amount at tax time? I know you can't claim the $5000, but the remaining amount?

Thanks!

Message edited 8/14/2008 12:58:48 AM.

Re: Is Dependant Care pretax accounts worth it?

*BUMP*

No one??? Do they even offer this in NY?

Wanted to add that I'm not sure also if it would be worth it, to take out of my DH's paychecks or mine. I thought since he makes more money, he'll save bigger on taxes each pay period. Any thoughts? Thanks!

Re: Is Dependant Care pretax accounts worth it?

Yes. it's usually worth it as long as you use all the funds in the account. You are putting money in the account pretax and using those dollars for the eligible reinbursements. If you wanted to use the eligible events as a deduction when filing your income tax, you will have to itemize and reach the floor before you get any benefit.

Re: Is Dependant Care pretax accounts worth it?

i think it is worth it especially if your total household income will phase out the daycare deduction on your taxes.

Re: Is Dependant Care pretax accounts worth it?

I assumed it was worth it since I figured no one would do it if not!
I do like it though because it is a lot less painful to pay for daycare when it comes out in smaller amounts from our paycheck.

Re: Is Dependant Care pretax accounts worth it?

I actually sell and use a dependent care fleixible spending account....and i believe that it is definatly worth it.

You get a tax break on money you are going to spend anyway...the IRS does limit a max contribution of $5000.00 per household...but lowering you gross taxible income by $5000.00 can save you $382.50 for SS/Med Tax plus the federal and state income tax....(the IRS extimates that the average person has 30% of their taxable income deducted from their paycheck.)

truthfully the pretax deduction does not effect your net pay all that much...because its pretax.

It is a use it or lose it plan...so plan to contribute what you think that you will actually use. If you spend 10,000+ a yr on day care then contribute the full $5000.00

Just make sure that your dependent care providfer has a federal tax id #. The person providing the care is over the age of 19 (if care is inside your home) Also the care provider can not be a person that you can claim on your tax return as a dependent. Also, you can use this plan to provide care of an adult member of your family (ex a parent with alztheimers (sp))

Hope this helps...if you have any more questions feel free to reach out to me.

Re: Is Dependant Care pretax accounts worth it?

I was going to ask about this as well.

How does this look on your paycheck? Does it just get added to your net pay as a gross amount? Probably not if its "use it or lose it" - so how does the day care facility get the $? Do you write the checks?

Re: Is Dependant Care pretax accounts worth it?