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© Hitesman & Wold, P.A. 2019 <br />Cafeteria Plan <br />Summary Description (3-11) <br />62 <br />E X H I B I T B <br />DEPENDENT CARE FSA v. Claiming Dependent Care Tax Credit <br /> <br /> <br />EXAMPLE – MARRIED EMPLOYEE WITH TWO CHILDREN <br />EARNING $48,000 <br /> <br /> <br />DEPENDENT <br />CARE FSA <br />CLAIMING <br />DEPENDENT <br />CARE TAX <br />CREDIT <br />1. W-2 Gross Wages (both spouses combined) $48,000.00 $48,000.00 <br />2. DEPENDENT CARE FSA Salary Reductions -$5,000.00 $0.00 <br />3. W-2 Gross Wages $43,000.00 $48,000.00 <br /> <br />4. Standard Deduction -$11,400.00 -$11,400.00 <br />5. Exemptions (4 individuals x $3,650) -$14,600.00 -$14,600.00 <br />6. Taxable Income (line 3 minus lines 4 and 5) $17,000.00 $22,000.00 <br /> <br />Calculation of Disposable Income <br />7. W-2 Gross Wages $43,000.00 $48,000.00 <br />8. Out-of-Pocket Dependent Care Expenses Not Reimbursed by <br />DEPENDENT CARE FSA $0.00 -$5,000.00 <br />9. FICA Tax (calculated separately on each spouse's share of the wages) -$3,290.00 -$3,672.00 <br />10. Federal Income Tax (line 6 @ tax schedule) -$1,713.00 -$2,463.00 <br />11. Non-Refundable Dependent Care Tax Credit $0.00 $1,000.00 <br />12. Non-Refundable Child Tax Credit $1,713.00 $1,463.00 <br />13. Refundable Earned Income Tax Credit $500.00 $0.00 <br />14. Refundable Additional Child Tax Credit $287.00 $537.00 <br />15. Refundable Making Work Pay Credit $800.00 $800.00 <br />15. Disposable Income (line 7 minus lines 8-10 plus lines 11-14) $41,297.00 $40,665.00 <br /> <br />Caution: This is just an illustration of how a comparison should be done and how many factors are <br />involved. Each person’s situation is different. You are encouraged to consult your personal tax adviser or <br />IRS Publication 503, “Child and Dependent Care Expenses” for further guidance. <br />