The calculator shows employees how much they will save in federal tax dollars by making pre-tax contributions to their benefit plans. It also offers a tool that shows the relative tax benefit of participating in an employer-sponsored dependent care assistance program (DCAP) when compared to the dependent care tax credit (DCTC).
The calculator takes into account:
- Filing status, exemptions, and deduction status.
- Employee and spousal wages, as well as, other income and adjustments.
- Eligibility for the earned income credit.
- The differing impact on FICA savings produced by salary reductions versus 401(k) and 403(b) salary deferrals.
- The number of dependents for DCAP and DCTC purposes, as well as the number of qualifying children for the child tax credit (CTC).
- The effect of salary reductions on when the CTC and other exemptions take effect.
The calculator, provided by the Employee Benefits Institute of America, Inc., is available here .