tax question

[RatLabGuy]

Yes of coure this is last minute, that's how I operate

Child care tax credit. Lets say I paid $5,000 for child care.
Now lets say that through work, I have 2,000 pulled out pre-tax in a childcare flex-spending account. So that money has not been taxed in the 1st place.
The way that it is worded, it seems I can still claim the whole 5,000 for the credit. Is this correct? Sure dosn't "feel" right.
Of course I know that you really only get to claim the 1st $3000 of this anyway so *technically* it wouldn't matter in this "hypothetical" case anyway... but next year the flex account will have more set aside in it....

 

[Ron]

well how is this for an answer

I claim the whole amount

Not sayng too much, or whats right or wrong just what I did.

 

[RenegadeT]

Man I'm in the exact same situation. I didnt do the flex last year, but am this year. The way I read the tax code (thru the TurboTax interview and help section), it allowed you to double dip. The only place I see where it might come into play is when you entered the figures from your W2 or W4 (whichever one is the earnings statement) and it might have a special code for the $2000 FSA withholding.
Sorry for the non-answer, just wanted to let ya know I read it the same way.

 

[RatLabGuy]

I skimmed the whole IRS paper on this credit last night. The only reference I could find that was even close was with employer-provided daycare benefits - you have to subtract it off the total max you can deduct. But thsi is in reference to employer *giving you* $xxx for daycare, like a benefit, not pre-tax witholdings.
I knwo there are plenty of ways to legally double-dip. While I obviously don't liek to pay a penny more than I have to, I just want to be sure I am also paying my fair share.

 

[RatLabGuy]

Here's another one: Hoby expenses.
The line is that you can deduct expenses for a hobby "only to thr extent that hobby provides income". My interperetation of this is that teh net does no thave to be a *profit*, right?
So lets say last year in conjuction with by "4x4 hobby" I sold a bunch of parts and made about $300. Then of course I also bought about $1000 in parts. Can you really deduct that???

 

[RatLabGuy]

Found answer to the latter quetion, here's a simple description:
http://www.bankrate.com/brm/itax/tips/20010403a.asp?caret=1

Basically you can only claim hobby expenses up to amount of income ssaid hobby brings in, and also aonly expenses that exceed 2% of AGI. Kind of like medical expenses.

 

[uglyjeepoffroad]

I got mine done today by a well respected local CPA that is certified in tax law.
I was not able to take the double credit.
I paid $6300 in child care and was reimbursed through work for $3300 of it.
I thought I could use the $3000 as a deduction, but, due to the way it was set up on my W-2, i could not.
I will say though, I went n expecting to pay around $1k to federal ( due to my wife's church job not taking any federal out) and left with a $300 refund.

 

[RatLabGuy]

I got mine done today by a well respected local CPA that is certified in tax law.
I was not able to take the double credit.
I paid $6300 in child care and was reimbursed through work for $3300 of it.
I thought I could use the $3000 as a deduction, but, due to the way it was set up on my W-2, i could not.
I will say though, I went n expecting to pay around $1k to federal ( due to my wife's church job not taking any federal out) and left with a $300 refund.

Lets see, if I understand correctly, your work actually reimbursed you $3000 for the childcare? You mean they functionally GAVE you $3000 that had to be applied to childcare, is this correct?
What I am referring to is specifically YOUR paycheck $$ that is witheld and put into a "dependent care spendin gaccount". When you spend the money on childcare, you file to get reimbursed out of your account... basically to get your money (that was yours in the 1st place) back. The whole (and only) reason for doing this is that it is witheld prior to taxes, so the $$ is never even reported as income in teh 1st place.