My clients both had dependent care deduction of $5k each (2 dependents). Totaling $10k. It appears they are only eligible to take $5k between the 2 of them. Therefore, $5k is added back as income. I'm surprised I haven't encountered this before. As a result, they end up owing $1400 but if I exclude $5k they would have only owed about $300. Just doing a reality check that I should advise them to only have $5k taken out in FSA since the other $5k will get added back in (for future years).
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Yes, only one of them should be having the FSA for childcare, or only do 2500 each.
Yes, only one of them should be having the FSA for childcare, or only do 2500 each.
Great. thank you.
I guess they didn't speak to their tax advisor first.
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