Federal Income Tax Savings

The Federal Tax savings is the amount you will save compared with no tax advantages.

For instance, if you simply pay for childcare, but do not report it on your tax return, your Federal Tax savings is zero.

-- Credit only

If you do report it, but do not have or use a flexible spending account, your Federal Tax savings is the amount paid multiplied by a predetermined percentage between 20% and 35%, depending on your income. There is a cap on the expense; it is $3,000 for one child or $6,000 for two or more children.

-- Flexible spending account

If you have a flexible spending account, your Federal Tax savings is the addition of two numbers.

• your marginal tax rate (one of these, depending on your taxable income: 10%, 15%, 25%, 28%, 33%, or 35%) multiplied by the amount contributed to the flexible spending account, usually $5,000
• if there are 2 or more children, there could be a credit on expenses in excess of the contribution to the flexible spending account. This is usually $1,000 ($6,000-$5,000) multiplied by a predetermined percentage between 20% and 35%, depending on your income.