Thursday, August 19, 2010

hot under the collar

We're starting an FSA program at work that includes dependent care expenses. M already has one but she wasn't a legal guardian for E at the time of her last open enrollment and we didn't get our act together to start it up during the 30 days after the adoption so we've been waiting for her next open enrollment period to come around. Now I have the option of setting aside $5000 pre-tax for daycare. This is great, except that it means we have to make a decision. An infuriating, insulting decision. Which of us will claim E on our taxes this year? Because only one of us can, and unlike what we do with our mortgage every year (plug it into both of our tax returns to see who it helps more before deciding who claims it), we have to decide this right now.

Please excuse me while I lose my shit for a moment...

[Edited 30 minutes later to say... Never mind. Lost my nerve already. Actually, I just have a very sick little boy and what is likely to be a long, worried night ahead of me and I'm not in the mood for any blog drama this rant might have sparked. I saved the original post in my drafts, so maybe I'll post it again another time.]

I'm totally going to come back and delete the above once I cool off. I get that rage like that will only serve to divide us further and it's not representative of how I feel on a day to day basis. I just felt so separate and so unequal and so very angry sitting in my office FSA presentation. It was just a little more than I could bear so you get my vent.

On a more practical note, anyone have tips as to which of us should claim him? Is the general rule to go with the higher income parent or am I making that up? Also, anyone knowledgeable about dependent care FSAs versus child care tax credits and which is likely to benefit us more? Maybe we should skip the FSA business altogether? I'm totally in over my head on this stuff.

Oh and while I'm venting:  Dear Japanese spammers, would you PLEASE go haunt someone else's blog for a while? I'm so sick of deleting your comments. I'd hate to go to comment moderation but I'm starting to think it's the best option, at least for a while. Lame.

6 comments:

Elise said...

totally shitty, isn't it?

I don't have a ton of knowledge in this area but I did want to confirm your thought that, yes, generally it will be most beneficial to claim children on the higher income.

Hope E is feeling better soon :(

nutella said...

Yes, it's rant worthy. It is my understanding that the higher income parent should claim the kid and the mortgage and participate in the FSA. It's basically like getting a 30% discount on $5,000 worth of child care. The child care tax credit can be claimed for any child care in excess of the FSA amount. They will also typically file as "head of household". This should maximize the refund in most cases. Talk to your accountant or financial planner for advice that applies to you specifically.

In our case, our income is almost exactly equal, so we've been taking turns. Except in 2009, Strawberry had to claim Miles in order to get the adoption tax credit. I will claim him for 2010 and I'm doing a dependent care FSA.

Feel better soon, E!

Emily said...

totally aggravating, but I'm pretty sure the higher earner should do the FSA!

jessie said...

In our case Greta has the higher income so she claimed him las year. I can't get an FSA but she can so we are doing it this year.

tireegal68 said...

those spammers drove me to comment moderation and still they come!
Can you talk to your tax attorney or do you do them yourselves?
We got one this year and she saved us a lot of money by having me ( higher earner cos S is in school ) claim the mortgage.
I would err on the higher earner for this too but don't really know.
Yes it sucks and yes it's rage making!
I hope E feels better soon:)
xoxoxo

Inlocoparentis said...

Would like to review the diatribe - always find you so articulate when you are angry. :)

You know I don't know anything about money, but I've always claimed the house. I'm guessing S could technically take the deduction for C as a result of our separate and unequal "co-custody" proceeding, but not 100% sure about that. Stupid.