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BeniComp Health Care FSA

The IRS limits the amount of dependent day care expenses eligible for a tax credit on your income tax return. The actual amount of your tax credit is determined by applying a percentage to your total work-related dependent day care costs (see chart below). These costs may not exceed $3,000 for one eligible dependent or $6,000 for two or more eligible dependents.
 
If Adjusted Gross Income Is:
Then Percentage Is:

$0—$15,000
$15,001—$17,000
$17,001—$19,000
$19,001—$21,000
$21,001—$23,000
$23,001—$25,000
$25,001—$27,000
$27,001—$29,000
35%
34%
33%
32%
31%
30%
29%
28%
(continued >>)
 
If Adjusted Gross Income Is:
Then Percentage Is:

$29,001—$31,000 27%
$31,001—$33,000 26%
$33,001—$35,000 25%
$35,001—$37,000 24%
$37,001—$39,000 23%
$39,001—$41,000 22%
$41,001—$43,000 21%
$43,001 + 20%
27%
26 %
25 %
24 %
23 %
22 %
21 %
20%
 
Below is a worksheet to assist you in calculation your potential tax credit.
 
 
Example
Your Cost
Total work-related dependent day care costs (up to $3,000 for 1 dependent, $6,000 for 2 or more)
$2,000
$
Percentage (see above table)
x 33%
x %
Tax Credit on Federal income tax return
$660
$
   
 
In general, if your family’s income is over $24,000, it will be more advantageous to use the Dependent Care Spending Account than the tax credit. The actual amount of your taxes will depend upon a variety of factors. The Dependent Care Spending Account Worksheet included in this brochure will help you decide which approach is better for you.
 

The worksheet below will help you estimate your eligible dependent day care expenses for the following plan year. Once complete, you may then use the worksheet on the next page to decide whether the Dependent Care Spending Account or the IRS Tax Credit is best for you. Remember, keep your estimates conservative because any unclaimed Dependent Care Spending Account dollars will be forfeited.

Eligible dependent care expenses are only those which enable you (and your spouse) to work. Your eligible dependents are children under the age of 13, a disabled spouse, or other dependents incapable of self-care.
 
 
Current Year Expense
Enrollment Year Estimate
Babysitters, daycare centers, nursery school
$
$
After-school programs, day or family camp
$
$
Adult day care
$
$
Total
$
$
 
The Dependent Care Spending Account vs. IRS Tax Credit Worksheet below will help you decide which program is best for you. Calculate your spendable income under each option by following the directions below the worksheet.
 
 
   
Dependent Care
Spending Account
(Column A)
IRS Tax Credit
(Column B)
1. Annual income
$
$
2. Estimated expenses
$
$
3.
Taxable income
$
$
4. Estimated Federal / Social Security Tax
x 7.65%
x 7.65%
  Total Federal / Social Security taxes (before tax credit)
$
$
5. Tax credit
$
$
6, Net Federal / Social Security Tax
$
$
7, Take home pay
$
$
8, Estimated expenses
$
$
9. Spendable income
$
$
 
Total
$
$
1. List your (and your spouse’s) total annual salary on line 1.
2. List the total amount of your Enrollment Year Estimate (that you calculated on page 11) on line 2 of the Spending Account (Column A) and line 8 of the Federal Tax Credit (Column B).
3. In Column A, subtract your Enrollment Year Estimate expenses from your annual income to find your taxable income using a Dependent Care Spending Account. Using the tax credit (Column B), your taxable income is the same as your annual salary. List these amounts on line 3.
4. Using Federal Income Tax and Social Security Tax (7.65%) rates as an estimate, calculate the Federal Social Security Taxes you would pay under each option and list these amounts on line 4.
5. Calculate your Federal tax credit using the chart found on page 10 of this brochure and list that amount on line 5 of the Federal Tax Credit (Column B).
6. Subtract your tax credit (line 5) from your Federal and Social Security taxes (line 4) to calculate your net Federal / Social Security taxes. List that amount on line 6.
7. Subtract your net Federal / Social Security taxes (line 6) from your taxable income (line 3) to calculate your take home pay. List those amounts on line 7.
8. In Column B, subtract your estimated expenses (line 8) from your take home pay (line 7) to calculate your spendable income using the Federal Tax Credit. List this amount on line 9. With a spending account, your spendable income is the same as your take home pay.
9. Compare your spendable income in each column to see which method provides the greater dollar amount. That is the option that is probably best for you.