Child Care

[ruka420]

I am having a hard time determining if I would do better off with a childcare plan here at work (money taken out of paycheck before taxes) or keep claiming child care at the end of the year. Here is my dilima, DH and I both get raises this month and we make OK money, but I am getting a pretty big raise and I think it will make us raise a tax bracket, if I open the childcare plan it makes me look like I don't get paid what I do since it is taken out before taxes, on the other hand I need a certain take home pay every two weeks to pay bills and whatnot. Can anybody out there help me with this!

Adrienne

[34saving]

I'm not a tax expert, but I'm pretty sure that 1) Only the amount of money that's in the new tax bracket gets taxed at that new rate. (So there's no way you'll take home less money after your raise just because of the new tax bracket.) 2) Whether you deduct the childcare stuff now or at the end of the year leads to the same net result, it's just a matter of timing. So, what was working for you before should continue working for you. That being said, most people say it's better to take the deduction upfront since otherwise you're giving the government an interest free loan. (Of course, convenience or you budgeting system or whatever might trump that thought ) I'm sure some tax experts out there will have some thought too

[mom-from-missouri]

my account told me (a single mom with 3) that I come out ahead using the child care flex plan. But, bear in mind, what you don't use, you lose. And, if you sometimes pay grandma or another relative $10 to watch them or pick them up from school...you can't use relatives on the flex plan, unless they are in the child care business or claiming it on their taxes as well. But, I also found out, that since in my state, kindergarten is not required, I could use mine to pay their kindergarten tution, up to the going rate for full time childcare-even though they were in a private school kindergarten. It worked out that their school tution was 120 a month, versus having them in a full time childcare center at $80 a week. So, I got to send them to private school, paying the tution with my pretax dollars. Of course, that stopped when they hit 1st grade, as first grade is a state requirement.