Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Ways to make child care more affordable Parents can minimize the financial burden of child care by contributing to a dependent care flexible spending account, according to Morningstar. Funded with pre-tax dollars, these accounts allow clients to pay less in taxes. However, it reduces the amount of Child and Dependent Care Credit that they may claim for raising their children. For instance, if a client sets aside $5,000 of pre-tax money in a dependent care FSA, they must deduct that amount from the child and dependent care credit they are otherwise eligible for. Another drawback is that these accounts, unlike health-savings accounts, are use-it-or-lose-it tax features. Any money set aside, but unused by the end of the year, is not available the following year.
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