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You know the saying "have your cake and eat it too"? I've found that it rarely applies to personal finance.

Usually, personal finance is about choosing one benefit or the other. You can't max out both a traditional IRA and a Roth IRA in the same year. You can't claim both the standard deduction and itemize.

But then, every so often, I stumble upon a magical example where you actually can have both.

That happened to me earlier this year, when I had the opportunity to sign up for my employer's dependent care FSA. These employer-sponsored accounts are fantastic in their own right — they help take some of the sting out of those brutal daycare bills by letting you set aside pre-tax dollars from your paycheck to pay for childcare or adult dependent care expenses. In other words, you still have to pay the full amount for care, but every dollar you set aside means a lower tax bill come April.

Right off the bat, I was intrigued. Daycare for our twins is expensive — brutally expensive — so any chance to lower those costs seemed worth exploring. But we've also been benefitting from the Dependent Care Tax Credit, which gives us a tax credit for eligible daycare expenses. Because we're dealing with personal finance (and the tax system), I assumed that this would be a "one or the other" situation.

So I called up one of my CFP friends and ran our scenario by him.

"Well, Meredith," he said, "I've got great news for you. Not only can you use both, but I'll tell you exactly how to swing it so you get the maximum amount back."

And because I care about you, dear reader, today I'm going to share everything I learned.

Turns out, you really can have your cake and eat it too — even when it comes to personal finance. And here's exactly how.

Dependent Care FSA 101

Like I said earlier, dependent care FSAs are employer-sponsored accounts that let you set aside pre-tax dollars from your paycheck to pay for childcare or adult dependent care expenses. And while it's never fun to see your paycheck shrink, if you know you're going to spend that money on daycare anyway, it's actually just like getting a discount on something you're buying no matter what. You're saving money because you're not paying taxes on those dollars.

You can contribute up to $5,000 per year if you're married filing jointly or single (the limit drops to $2,500 for people married filing separately), and you can use the money to pay for eligible expenses like daycare, preschool, before- and after-school care, summer day camps, and even care for adult dependents who can't take care of themselves. (You can see a complete list of eligible expenses at the official FSA government website here.)

Since your contributions are pre-tax, you're lowering the amount of income that gets taxed in the first place. So, if you're in the 22% federal tax bracket and put the full $5,000 into your FSA, you'll save about $1,100 in federal taxes alone. Additionally, you'll likely save another few hundred dollars in payroll taxes (like Social Security and Medicare), so your total savings could be even higher.

The downside? These limits haven't budged in decades, even though daycare prices have skyrocketed. Also, you want to make sure you actually use the money you set aside in your FSA; the dreaded "use-it-or-lose-it" rule means any money left in your FSA at the end of the year (or grace period) goes poof.

Dependent Care Tax Credit 101

Then there's the Dependent Care Tax Credit, which is another way to make your childcare expenses a little less painful. Unlike the FSA, you don't set money aside upfront. Instead, you claim the credit when you file your taxes, which means you get the benefit after the fact.

Here's how it works: You report your eligible expenses on your tax return, and the IRS gives you a credit that reduces the taxes you owe. So while it doesn't put money directly in your pocket right away, it does take a bite out of your tax bill.

You can claim up to $3,000 in expenses for one dependent or $6,000 for two or more dependents. Then, the credit covers between 20% and 35% of your claimed expenses, depending on your income. (Most middle-income families get the 20% rate, which applies to anyone whose adjusted gross income is above $43,000.)

So, what does that look like in real life? Not as straightforward as you might think. In fact, the first year we claimed this credit, I spent about 30 minutes staring at our tax software trying to understand why I was only getting a $1,200 credit when our two children clearly qualified us for $6,000 of expenses. (In my defense, the boys were in the middle of a sleep regression and we were only getting a few hours of sleep each night.)

Here's how it worked for us last year (before the FSA).

- We have two boys in daycare, which means we can claim up to $6,000 of our daycare expenses.
- Our AGI is above $43,000, which means we get a tax credit equaling 20% of our eligible daycare expenses.
- 20% of $6,000 = $1,200 tax credit

It's not the $6,000 I was initially expecting, but we'll take any help we can get… and I'll bet most parents feel the same way. The thing to remember is that this isn't a refund — you won't get a check from the IRS if your tax bill is already zero. It just lowers what you owe.

This credit is especially useful if you don't have access to a Dependent Care FSA through your employer. Plus, it's available to most taxpayers, regardless of where you work.

How to Combine Both and Maximize Your Savings

So there I was, on the phone with my friend, trying to make sense of how to get the most out of this whole dependent care FSA and tax credit situation. I told him this was the first time I’d ever been offered this type of FSA as a benefit, and I didn't know whether to jump on it or stick with the tax credit we'd been using.

"Not only can you use both," he said, "but I'll tell you exactly how to swing it so you get the maximum amount back."

I was immediately all ears.

Step 1: Use the FSA First

He started by explaining that, for most people, the FSA saves you more upfront because it lowers your taxable income. So, he said, the first step is to max out the FSA if you can. That means setting aside $5,000 pre-tax if you're married filing jointly (or single).

"Get that money in there," he said, "because those dollars are the most valuable — no income tax, no payroll tax. You're getting a discount on every single dollar. Plus, depending on your tax bracket, the amount you save just from maxing out your FSA could actually end up being more than what you'd get using only the tax credit."

Step 2: Use the Tax Credit for Leftover Expenses

Then he got to the part I really didn't know about. "Here's the kicker," he said. "You can still use the tax credit for whatever your FSA didn't cover. So if your daycare costs more than $5,000 — which, let's be honest, what daycare doesn't? — you can use the tax credit to mop up the rest of those expenses."

"You can claim the tax credit on up to $6,000 total expenses for two or more kids, minus the amount you already covered with the FSA. If you had only one kiddo, you'd be out of luck, since the $5,000 from the FSA would exceed the $3,000 of expenses covered by the tax credit, so no extra money back. But because you have two, that still leaves $1,000 of expenses for the tax credit even after using the entire $5,000 of FSA money."

Step 3: The Real-Life Math

He broke it down for me with a real-life example: "Let's say your daycare costs stay the same next year, so you'll spend $13,000 on daycare for the twins this year. You put the full $5,000 into your FSA, which probably saves you about $1,500 in taxes upfront (because that money wasn't taxed in the first place). But that still leaves $8,000 in additional daycare expenses that haven't benefited from any tax breaks."

"Since the tax credit covers up to $6,000 for two kids, you can claim the credit on the $1,000 that's still eligible. With a credit rate at 20%, that's an extra $200 off your tax bill.

When he finished laying it all out, I was practically scribbling notes. "So, let me get this straight," I said. "You're saying I can use both as long as I don't double-dip, right? And instead of saving $1,200 from just the credit, I could end up pocketing more than $1,700?"

"Exactly," he said. "You're combining the best of both worlds — getting the tax break upfront with the FSA and then a little extra back on your taxes with the credit. That's how you have your cake and eat it too."

And just like that, I had my answer. Sometimes, personal finance actually does work out in your favor — if you know how to work the system.

Don't Leave Money on the Table

At the end of the day, figuring out how to stretch your dollars when you're paying for childcare is no small task. Whether it's daycare, summer camp, or even adult dependent care, those bills add up fast.

But here's the good news: If your employer offers a Dependent Care FSA, you don't have to choose between using it and taking the tax credit. You really can do both — as long as you follow the rules and don't double-dip.

Of course, everyone's tax situation is a little different, so it's a good idea to consult a tax professional to figure out the best approach for your family. They can help you navigate the specifics and make sure you're getting the most out of both the FSA and the tax credit without running into any issues.

For us, the trick is to max out your FSA first to get the bigger, upfront savings and then use the tax credit to cover whatever your FSA didn't. Yes, it takes a little planning, but the payoff is totally worth it. And if you're lucky enough to have a CFP friend who's willing to break it down for you? Even better.

The real takeaway here is that understanding your options — and using both where you can — means more of your money stays in your pocket instead of going to taxes. And when you're dealing with sky-high daycare costs, every little bit helps.

So don't leave money on the table. Take the time to set things up the right way, and you'll thank yourself next tax season.