Paying for Daycare

Hi, first post here:) I haven’t seen much discussion about this on FWF.

DW and I are expecting a little one soon. We will be doing daycare two days per week, which will still cost half of the mortgage. I’d like to hear your thoughts about ways to save or take advantage of credit card rewards. At least we won’t have to worry about MS anymore.

-The daycare gave us a 10% discount cause we work for a large company.
-Pay in full discount?

-max out DCFSA
-Child Care Tax Credit

-Get a new credit card every 3 months? This would disqualify us from the Chase 5/24 and BoA 2/3/4 rules. We would end up with more miles/points than we could use. Maybe a 2% cash card would be better, or cash out the points/miles from sign up bonuses at a lesser value? We don’t have a business so we can’t get business credit cards (I think?).

Re business credit, think again. Haven’t had biz CCs lately, but check FWF threads on this topic. AND, be sure to do it on 10/7 (today) or 10/8; as you may know, FW is scheduled to close its doors forever on Mon., 10/9.

Do you mean to use your name/SS as business name/EIN when applying? I’ve tried this years ago with Chase but got denied.

Yes, that’s the basic idea. I recall reporting on the applications that I was a sole proprietor with $0 income. If they asked how long I had been in business, I’d say 1 year, IIRC.

Again, check FWF threads on this. I honestly don’t know whether the business CC landscape has changed much in recent years. Also beware that some CC issuers are/were ripe for this sort of activity, and others are quite the opposite (sounds like Chase).

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Yeah, you can get a business credit card as a sole proprietorship using your SSN as an EIN.

I usually tell them I am planning on buying a rental property and want to expenses associated with acquiring the property on a separate card.

Unfortunately every real estate deal I’ve gone after has fallen through :wink:

You almost surely can’t max out a DCFSA and claim the CCTC, gotta go with one or the other. DCFSA is almost guaranteed to be better for you, but run a simulation to be sure.

Have you already picked out your daycare? 2 day a week care is very rare, at least here it is, you may do better with a 2 day a week nanny.

If you haven’t picked out your daycare don’t sweat how you’ll pay for it yet. Not saying you should bargain shop but you shouldn’t throw out a daycare that doesn’t accept CCs because you want the points.

Also location is key. You’re going to be called to pick up a sick baby, you’re going to have to make it to that daycare in the morning when the baby just had a ginormous blowout on the way. You’ve got a meeting at 9:30 and the baby didn’t sleep all night, and then at 5am finally went to sleep and you’re dying to get to work but don’t want to wake up the baby. Plan out how you’re going to handle these kinds of events now.

If you commute you can get carpool if you have the baby in the car here in CA. Picking a daycare near your work allows you easy access to pick up the baby if/when you’ll need to. It also gives you carpool.

Oh and congrats on the baby Matrix5k.


Thanks! Yes we already made our decision and put in the deposit. We liked the daycare on the tour, it’s close to home/work, and we heard good things from coworkers. There are slim pickings in our area, but they actually all offer 2 days per week. We prefer daycare over a nanny for now. The cost isn’t a problem, we just want to optimize how to pay for it.

I would absolutely find a Nanny. Cost is similar, we’ve had great luck with At a daycare, one person is watching 4 infants. You just can’t get the same kind of care at a daycare that you can with a one on one.

A huge side benefit is that extra hour of sleep as you don’t have to wake up early, get the kid ready, drop them at daycare, etc.

So our little one was in daycare for about a month and it sucked. He barely slept and ate and was exhausted everytime we picked him up.

We put 5k into DCFSA but there is about 4k left. Every nanny we’ve interviewed insists on getting paid under the table.

Any creative ways of spending down the DCFSA? I hate FSAs…

Will daycare accept advance payment toward your account (providing you with a receipt for DCFSA) then refund without fees if you cancel care? Most daycares I know will give full refund with one to two week notice but may charge for at least one week if no notice. Need to get and read the fine print carefully here as some daycares are sticklers.

Creative DCFSA: This wouldn’t apply for you since you have an infant but last year we had our six year old enrolled in a summer camp program that is DCFSA compliant. We paid in full at the beginning of the summer but later needed to cancel 2 weeks of camp (unplanned). They refunded for those weeks (minus $5 cancellation fee) but we had the prior receipt for full DCFSA redemption.

I’m not sure if advance payment would work because the reimbursement process requires an itemized receipt showing the date and amount for each day/week of service.

I suppose we can keep looking for a nanny that is willing to be paid legally.

I have seen this discussed elsewhere. Sometimes it is suggested to find a good nanny and pay more to offset the taxes. The nanny would have to cooperate with this plan but it is worth a shot.

Do they pay more legally only until the FSA runs out, then pay less cash after that? Does that raise the risk of audit?

Of course there’s always the chance of getting caught (which is more her problem than yours, unless you have political aspirations), but the info you need to provide to get reimbursed does not affect the nanny. It isnt a 1099 that gets reported under her SSN, the “receipt” is merely provided to your FSA administrator and that’s where it stays. The nanny is still free to do as she wishes regarding her personal taxes.

Frankly, if your goal is just to get your FSA money this year, just say grandma watched him, and submit a receipt from her to get reimbursed.


Oh wow so we can max out DCFSA every year and just say Grandma watched our kid? Sweet deal!

And when you get the money back out of the FSA you’ll be sure to pay the income and payroll tax on it, right?

I said if your goal was to get the money out THIS YEAR, it’s an option. But as a one-off desperation option, since the account balance is use-it-or-lose-it. I wouldn’t plan to do it on a regular basis every year, better to make sure you don’t end up with extra money in the FSA in the first place.


Got it, thanks!