As many parents know, it can cost money to go to work. Those with kids under the age of 13 may have to set aside a little extra for childcare expenses. Fortunately, a federal income tax credit can help pay the bill. It’s available to all eligible parents, regardless of their income (although lower-income folks get bigger credits).

You might also be eligible for your employer’s childcare flexible spending account plan. When the FSA deal is available, it can be a bigger tax-saver than the credit.

Here’s what you need to know about both breaks.

Child-Care Credit

The credit can be claimed only for childcare expenses that facilitate your going to work. If you’re married and file jointly, you can generally claim the credit only if your spouse also works or goes to school full-time for at least five months during the year.

For 2010, the credit is based on up to ,000 of eligible expenses to care for one child under 13 or up to ,000 for two more. If your child turns 13 during the year, only expenses before his birthday count.

The credit ranges from a high of 35% of eligible expenses (limited to no more than ,000 or ,000 of expenses) to a low of 20%. The maximum 35% rate is available if your adjusted gross income is ,000 or lower. The rate gradually drops to 20% as your AGI approaches ,000. Above ,000, it sticks at 20%. In fact, that 20% rate applies even if you earn gazillions because this is one break that is not phased out for high-income individuals.

Example 1: You and your spouse both work and earn healthy salaries. You have one child under 13 and ,000 of childcare expenses. Your credit is 0 (20% x ,000 expense cap for one child). If you have two children under 13 and ,000 of expenses, your credit is ,200 (20% x ,000 cap for two or more kids).

Now for a couple tricky rules:

* Eligible childcare expenses are limited to your earned income for the year. If you’re married and file jointly, expenses are limited to your spouse’s earned income or yours – whichever is lower.

* If you work and your spouse is a full-time student for at least five months during the year, he or she is deemed to have 0 of imaginary earned income for each month (or part of a month) of full-time school. If you have two or more kids, the imaginary earned income is 0 for each month (or part of a month). For any given month, only one spouse can take advantage of this special rule for students. If you’re unmarried, it’s completely off the table.