Something just came to mind with the new tax bill and daycare as a tax deduction & I'm someone here might have a little wisdom.
In 2017 we maxed out a daycare flexible spending account, which was all pre-tax money. We could have just paid fully from post-tax earnings and made up for it by claiming the deduction at year end, but at least took that $5k in maximum daycare FSA eligibility to make it easier to budget through the year, and we'll be able to claim the excess of the $5k in deductions.
However, now the standard deduction jumps up to $24k. We don't owe much on our mortgage & don't pay much interest on it, don't have many business expenses out of pocket, not really much to deduct beyond the normal things, so we won't have $24k in deductions. It got me thinking -- if we go ahead and max out the $5k pre-tax daycare FSA again this year and have the $24k standard deduction next year, won't that in effect allow us to grab a loophole and technically have both the $24k standard deduction and the additional $5k? We wouldn't "owe" those taxes back, would we?
Any ideas on this? I'm no tax guy, but if there's a loophole here, I'm taking full advantage of it. No sense in letting an extra $5k be taxed if I can avoid that.
In 2017 we maxed out a daycare flexible spending account, which was all pre-tax money. We could have just paid fully from post-tax earnings and made up for it by claiming the deduction at year end, but at least took that $5k in maximum daycare FSA eligibility to make it easier to budget through the year, and we'll be able to claim the excess of the $5k in deductions.
However, now the standard deduction jumps up to $24k. We don't owe much on our mortgage & don't pay much interest on it, don't have many business expenses out of pocket, not really much to deduct beyond the normal things, so we won't have $24k in deductions. It got me thinking -- if we go ahead and max out the $5k pre-tax daycare FSA again this year and have the $24k standard deduction next year, won't that in effect allow us to grab a loophole and technically have both the $24k standard deduction and the additional $5k? We wouldn't "owe" those taxes back, would we?
Any ideas on this? I'm no tax guy, but if there's a loophole here, I'm taking full advantage of it. No sense in letting an extra $5k be taxed if I can avoid that.