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Financial Planning / Tax Strategies
|Subject: Re: Dep Care credit vs Pretax acct||Date: 3/25/2013 2:38 PM|
|Author: TMFPMarti||Number: 118147 of 121108|
AGI of $55k, total dependant care expenses of $2k.
Putting all $2k in a pretax account will reduce my AGI and save me at my marginal 15% Fed rate and 7.05% MN rate = $441.
Claiming all $2k as qualified expenses instead will get me 20% back as Dep Care Credit = $400.
What am I forgetting?
MN may also give a credit, BUT if you use the pre-tax you also avoid SS & Medicare on the amount. No-brainer for the pre-tax account.
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