What this line means
The smaller of your calculated amount from line 6 or the dollar limit — $3,000 for one qualifying person, $6,000 for two or more qualifying persons. If your employer provided dependent care benefits (reported in Box 10 of your W-2), those benefits reduce this dollar limit before you apply it. 1
This is the final expense amount that the credit percentage gets applied to. Everything upstream — qualified expenses, earned income comparisons, dollar caps, benefit offsets — funnels down to this single number.
Does this apply to you?
- You completed lines 1 through 6 and have a positive amount on line 6
- You have one qualifying person and your line 6 amount is $3,000 or less
- You have two or more qualifying persons and your line 6 amount is $6,000 or less
- Your employer contributed to a dependent care FSA or provided dependent care benefits
- You need to reduce the dollar limit because of employer-provided benefits from Part III
Easy to overlook
Employer dependent care FSA contributions reduce your dollar limit If your employer provided $5,000 through a dependent care flexible spending account, your maximum qualifying expenses drop from $6,000 to $1,000 (for two or more qualifying persons) or from $3,000 to zero (for one qualifying person). Many filers use the full FSA and assume they still get the full credit on top of it. You do not — the FSA and the credit share the same $5,000/$6,000 pool. 2 General filing pattern — employer dependent care benefits reducing credit
The dollar limit is per return, not per child Two children in daycare costing $10,000 total still hit the $6,000 cap. Three children do not get $3,000 each. Filers with multiple children sometimes expect the limit to scale with the number of qualifying persons beyond two. It does not. The cap is $6,000 regardless of whether you have two children or five. 1 IRS Form 2441 instructions — Line 8
Watch out for this
If both you and your spouse each have a dependent care FSA through separate employers, your combined exclusion is still limited to $5,000 total (or $2,500 if married filing separately). Couples who each contribute $5,000 to their own employer’s plan have over-contributed by $5,000. The excess becomes taxable income on your return and must be reported on Form 1040, line 1e. This also wipes out most or all of your remaining credit on Form 2441.
Footnotes
-
IRS Form 2441 Instructions, Line 8 — Allowable Expenses. https://www.irs.gov/pub/irs-pdf/i2441.pdf ↩ ↩2
-
IRS Publication 503, Child and Dependent Care Expenses, Employer-Provided Benefits. https://www.irs.gov/pub/irs-pdf/p503.pdf ↩