One thing nobody mentioned yet - make sure your daycare gives you a statement with their tax ID number (EIN or SSN) at the end of the year. You need this regardless of whether you're claiming the credit or using FSA funds. If they refuse or seem sketchy about providing it, that's a huge red flag!

Just wanted to add another perspective here - I'm a tax preparer and see this confusion all the time! For your 2023 situation, you're correct that you can't claim the Child Care Tax Credit for the $495 that was reimbursed through your DCFSA. Your tax software is probably asking for the provider info because it needs to verify that you used qualified expenses, even if you're not getting an additional credit. You should enter the provider information but indicate that the expenses were reimbursed. Regarding your daycare's offer for 2024 - this is definitely unusual and potentially problematic. Legitimate daycare providers should charge the same rate regardless of your tax choices. They have no way to know if you claim the credit, and it doesn't affect their tax liability. I'd be cautious about any provider trying to tie their pricing to your tax decisions. For your planning, with expected costs of $9-10K and a $5K DCFSA contribution, you'd potentially be able to claim the Child Care Credit on expenses above the $5K that wasn't covered by your FSA. Just remember the credit has income limits and phases out at higher income levels. Make sure to keep all your receipts and get the provider's tax ID regardless of which benefits you use!

Late to the party but just wanted to say THANK YOU to everyone who contributed to this thread! I've been filing my taxes wrong for the past 2 years because my tax guy didn't understand how DCFSA and the Child Care Credit interact. We have twins and spend about $14k on childcare annually. We max out our DCFSA at $5k, but I had no idea we could claim the additional expenses (up to $6k total for two kids) for the Care Credit. Just amended my 2023 return and will be getting back over $1,200! This is why I love reddit - learn something new every day that actually saves real money. Checking out that taxr.ai thing too, sounds like it might be useful for some other questions I have.

Great question Andre! You're mostly right but there's actually a bit more nuance here that could benefit you. With one child, the Child and Dependent Care Credit allows up to $3,000 in qualifying expenses, while your DCFSA maxes out at $5,000. Since you contributed the full $5,000 to your DCFSA, you've actually exceeded the $3,000 credit limit already. However, here's where it gets interesting - if your total childcare expenses were $7,800 and you used $5,000 through DCFSA, you have $2,800 in remaining expenses. Since this is under the $3,000 limit for one child, you could potentially claim a credit on that $2,800! The credit percentage ranges from 20-35% based on your AGI, so even at the minimum rate you'd be looking at a $560 credit ($2,800 × 20%). Not a huge amount but definitely worth claiming if you qualify income-wise. Just make sure when you're entering this into TurboTax that you're not double-counting the expenses you already got the tax benefit from through your DCFSA. The software should guide you through this, but it's good to understand the mechanics behind it!

Make sure you also understand the exact terms of what happens if the company goes under or gets acquired during your service period! I had a "forgivable loan" for my MBA that turned into a NIGHTMARE when my company was acquired and the new parent company didn't honor the original forgiveness terms. I ended up with both a huge tax bill AND had to repay part of the loan.

Another important consideration is to get clarity on how the company handles tax withholdings during the forgiveness period. Some employers will "gross up" the forgiven amount to cover your tax liability (essentially giving you extra money to pay the taxes), while others leave you responsible for the full tax bill on your regular salary. For example, if $36k of your loan is forgiven in year one of employment, that's $36k of additional taxable income. Depending on your tax bracket, you might owe $8k-12k in taxes on that forgiven amount, but your regular paycheck won't have had those taxes withheld. This can create a nasty surprise at tax time or require you to make quarterly estimated payments. I'd strongly recommend asking your employer about their tax withholding policy for loan forgiveness before you sign. If they don't gross up or handle withholdings, make sure you're setting aside money throughout the year to cover the tax liability.

Just to add another layer of complexity, if these patents were developed internally rather than purchased, the tax treatment would be totally different! R&D costs to develop patents can be either expensed immediately or amortized over 5 years for tax purposes (depending on an election), while for GAAP they're capitalized once technological feasibility is reached and then amortized over useful life.

My accounting professor always said "GAAP is for investors, tax is for the government" - they serve different purposes! GAAP wants to accurately reflect economic reality over the true useful life, while tax rules are designed for consistency, ease of administration, and sometimes to incentivize certain behaviors. That's why we end up with these differences.

Has anyone tried using multiple SIC codes? I'm wondering if there are any drawbacks to listing both 7372 and 8299 on different forms.

For ed-tech companies like Khan Academy, you'll likely want to use SIC code 7372 (Prepackaged Software) as your primary classification, especially if your revenue model is subscription-based software delivery. The key factor is how your business generates revenue - if it's primarily through software licensing/subscriptions, then 7372 is most appropriate. However, I'd strongly recommend also familiarizing yourself with the corresponding NAICS code 511210 (Software Publishers), as most government forms and business registrations now use NAICS instead of SIC. Many banks, investors, and regulatory agencies have transitioned away from SIC codes entirely. One thing to consider is that some states have specific licensing or regulatory requirements for educational service providers, regardless of your delivery method. It's worth checking with your state's business registration office to see if there are any additional requirements for companies providing educational content, even through software platforms. The educational component doesn't necessarily require a separate classification if your primary business activity is software development and distribution - the fact that your software serves an educational purpose doesn't change the fundamental nature of your business model.