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I am trying to talk my employer into offering these, and they had a couple of questions (they haven't talked to the accountant yet) that I was unable to answer definitively:

1) From what I can gather, you CAN double-dip; use both the FSA to use pre-tax funds AND take a credit for the amount over that spent on child care. So, let's say you spent $7000 - you would be able to use $5000 pre-tax money on that and then also take $2000 into consideration for the child care credit, right? Since the cap on the credit is $3000 in expenses, this sounds....extraordinarily fantastic, and from my readings of publications that sounds like exactly what you are able to do.

2) Would this pre-tax contribution change gross income in a way to qualify for EIC? So let's pretend Person A makes $35000 a year, and puts $5000 into an FSA for child care expenses - does this adjust their income down to $30000 for EIC purposes, therefore qualifying them for EIC?

Thanks for any guidance!

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