child care credit vs. dependent care reimbursement

[Guest kjk]

Does anyone know what the 2002 income crossover point is beyond which it becomes more beneficial to take the child care tax credit rather than participate in an employer's dependent care reimbursement plan?

[GBurns]

Do a search of the old posts. There was an excellent discussion over 2 years ago ans someone provided a super worksheet which you could upgrade to find the crossover point.

[GBurns]

Here is the link:

http://www.benefitslink.com/mbmirror/869.html

[Guest kjk]

Thanks. I had uncovered that post, but I'm still not sure what the $24,000 cutoff noted in the worksheet would correspond with today. Perhaps it's the point at which someone (in 1995) would have moved into the 28% rate bracket . . .

[papogi]

That's exactly right. It generally follows the line between the 15% and 27.5% tax brackets. If the employee is in the 15% bracket, usually the credit makes sense. If they are over the 15% bracket, often the DCSA makes sense. Of course, this 15/27.5 line varies depending on filing status. When you work each person's numbers, you find you need to try both ways to be sure. The number of exemptions can affect things, and whether the employee takes the standard deduction or itemizes can affect things. It always comes out close, but one wins. If it even saves $5, it's worth running the numbers.

[Guest kjk]

Thank you! Very helpful.