What is a Dependent Care Flexible Spending Account?
A Dependent Care Flexible Spending Account (FSA) is a pre-tax benefit account used to pay for dependent care services while you are at work. The money you contribute to a Dependent Care FSA is not subject to payroll taxes, allowing you to pay fewer taxes and take home more of your paycheck.Who qualifies as a dependent?
Under this type of account, a dependent is defined as a child under the age of 13, as well as adults or other relatives that are incapable of caring them themselves (if you provide more than 50% of their support). Please keep in mind that they must live with you and be claimed as a dependent on your tax return.What is a work-related expense?
A work-relaxed expense is an expense that is incurred while you (and your spouse if married and filing jointly) are working or looking for work. For example, if both you and your spouse work full time and you pay for after-school care for your kids, that is a work-related expense. Please note: unpaid and nominal paid volunteer work do not qualify as work.What type of care is eligible?
There are a wide variety of eligible services, such as preschool, summer day camp, before- and after-school programs, and child or elder daycare. Please keep in mind that IRS rules determine which expenses are eligible.What type of care is not eligible?
Expenses that are not eligible include care for a child age 13 and over, overnight camp, babysitting that is not work related, school fees for kindergarten and higher grades, and long-term care services.How much can I contribute?
The IRS limits annual contributions to $5,000 for those filing taxes as single or married filing jointly, and $2,500 for married filing separately.When will I have access to my dependent care FSA funds?
You will have access to the funds once they have been deducted from your paycheck.Are there any restrictions about who can care for my dependents?
Dependent care FSA funds cannot be used for care provided by a spouse, a person you list as a dependent for income tax purposes, or one of your children under the age of 19.What happens if I do not spend all my DCA funds by the end of the plan year?
It is essential to estimate conservatively during elections. Any unused funds at the end of the plan year are forfeited, also known as the “use it or lose it” rule.When can I make changes to my election amount?
The election amount is decided at the beginning of each year. However, if you experience a qualifying event, such as the birth of a new child, or if your child care provider significantly increase their rates, you may be eligible to adjust your contribution.