I believe you can do both as long as you have more expenses than the DCFSA limit. I believe the DCFSA generally comes out slightly ahead. I don't see why you couldn't add it later after the qualifying event but once the baby comes I would go for it for any known expenses (it is "use it or lose it" so you don't want to commit too much). Then for any expenses above the DCFSA, see if your tax software will let you claim it.Thank you, @aristotelian.
Child Tax Credit is the big one.
Dependent Care Flexible Spending Account and/or Child/Dependent Care Tax Credit are also important. There should be threads here on when to do one or the other, or both.
You already have 529.
You may want to familiarize yourself with UTMA accounts and when/how to report taxes for them.
It's annual benefits enrollment time at my company, and they offer a $5,000 Dependent Care FSA (MFJ). I’ve been reading up, but I’m confused about which option is more tax-beneficial: the Dependent Care Flexible Spending Account (DC FSA) or the Child and Dependent Care Tax Credit. I understand I can only choose one. It also seems like I need to make a decision on the DC FSA now, since even though the birth of a child qualifies as a life event, I won’t be able to add the DC FSA after the baby arrives (fingers crossed) next year.
Statistics: Posted by aristotelian — Fri Oct 18, 2024 9:29 pm