Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.
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I'm sorry to hear about your child. I hope they are feeling well today.
What you are describing would not be a dependent care expense ...this would be a medical expense.
As such, you would be able to deduct the total amount of medical costs that you incur that exceed 7.5% of your income.
Or, you could put the funds in a healthcare expense reimbursement account.
If you do that, you cannot deduct what is paid for out of the healthcare reimbursement account...since that money is tax free.
That information is for medical expensews
However, the DCRA does allow you to pay for care provided by an in-home nurse or nursing assistant.
A list of eligible and ineligible expenses would be found, HERE
You can't double dip and use the funds from the dependent care reimbursement account for the Child and Dependent care tax credit
You can read an article about this, HERE
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Another expert here.
Can I put both $5k in a DCRA and claim the C&DC tax credit or is it one or the other?
No, you can not exclude the $5,000 of benefits and also claim a credit, regardless of income or amount spent on child care for one child.
See the Form 2441 at http://www.irs.gov/pub/irs-pdf/f2441.pdf
Line 29 of the form limits the amount for credit to $3,000 for one child (or $6,000 for two children) less the smallest amount of (1)the amount of care paid for,(2) earned income for the year and (3)$5,000.
If you have pretax dependent care benefits you received of $5,000 there is no allowable child care credit for one child (and only up to $1,000 for two children)
The care may potentially be allowed as a medical expense, as mentioned.
Please let me know if you need clarification.
If I know that:
1) My 19 month old with TEFRA will be watched 16 hours/week @ $15/hr by a private duty nurse ($12,480) because of her feeding tube and chromosomal microdeletion. She will not be accepted at any daycare and isn't "Sick" enough to qualify for any care services that would allow my wife to go to work.
2) My wife works those 16 hours/week to maintain benefits and our household income is >$100k.
3) We do have a W-10 filled out by the nurse that watches our daughter.
4) We will have other medical expenses to claim, ranging from surgeries, mileage, copays and deductible payments.
A) Put $5000 into the DCRA and then the remaining $7,480 in care costs can go against our itemized medical expenses?
B) Just put all $12,480 against medical expenses?
C) Put $3,000 against CD&C and the remaining $9,480 against our itemized medical expenses.