Self Employed Income, Dependent Care FSA, and Solo 401k

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jimmyrules712
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Joined: Thu Jan 06, 2011 11:36 pm

Self Employed Income, Dependent Care FSA, and Solo 401k

Post by jimmyrules712 » Tue May 22, 2018 12:37 pm

My wife has made about $1,600 in self employed income (after subtracting expenses) this year and will most likely not work any the rest of the year (just had a baby). No other income for the year.

I originally expected her to work a lot more so last year at benefits enrollment I signed up for a dependent care FSA to pay for part time daycare.

My understanding is all daycare expenses up to her income are eligible to be covered by the DFSA but nothing in excess of her income.

She also has a solo 401k. If she contributes $1,600 to her solo 401k does that effectively reduce her income to $0 and mean none of the daycare expenses can be covered by the DFSA? Or can she do both?

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