Dependent Care Spending Account
What You Need to Know:
FSA funds can be used for dependents under age 13 whom you claim as dependents on your federal tax return. Consider taking advantage of your FSA benefit if you plan on utilizing a babysitter or caregiver, child care center, daycare or preschool.
All employees who have sufficient earnings to have the necessary deductions made are eligible to participate in the Dependent Care Spending Account immediately upon hire or during Open Enrollment.There is no waiting period to participate in the Dependent Care Spending Account.
Use it or Lose it
Any money you set aside in the dependent care spending account and do not use between July 1, 2014 and June 30, 2015, you lose. Last date a claim may be filed for the previous plan year is December 31.
How It Works
You may contribute from $500 to $5,000* to the Dependent Care Flexible Spending Account to reimburse yourself from tax-free savings for dependent care expenses. In order to participate, parent(s) must either be employed or enrolled in school. Additionally, you may also use the account if your spouse is disabled or a full-time student for at least five months during the year.
*In some circumstances, your maximum annual contribution may be lower than $5,000.
If you are married and your spouse contributes to a similar account, your combined contributions may not exceed $5,000 per year.
If you are married but file separate tax returns, your annual contribution is limited to $2,500.
Your contributions cannot exceed the amount of your income or your spouse’s income, whichever is lower.
Tuition for kindergarten is not an eligible expense.
Can only be used to reimburse expenses for the care of eligible dependents. Eligible dependents include children under age 13 whom you claim as dependents on your federal tax return
Any other dependents who are mentally or physically disabled and normally spend at least eight hours in your home each day.
Eligible Expenses for reimbursement through the Dependent Care Spending Account include:
Services provided by babysitters or care givers, including your relatives whom you do not claim as exemptions on your federal tax return (your children must be age 19 or over to be considered a care giver)
Expenses for a housekeeper whose services include care of an eligible dependent
Services provided by a licensed elder care center, child care center, daycare or preschool
Social Security and other taxes you pay a care giver
List of Eligible Expenses for Dependent Care Spending Account
Dependent Care Assistance Program (DCAP) Eligible Expenses Dependent Care account funds can be used for dependent day care provided during working hours. Expenses are eligible for reimbursement after the care is provided. Examples of eligible expenses include:
- Before school or after school care (other than tuition expenses)
- Custodial care for dependent adults who live with you at least eight hours a day
- Licensed day care centers
- Nursery schools or pre-schools
- Placement fees for a dependent care provider, such as an au pair
- Late pick-up fees due to work schedule
- Summer or holiday day camps
Expenses that CANNOT Be Reimbursed Through a Dependent Care Account
- Expenses for children 13 and over
- Educational expenses including kindergarten or private school tuition fees
- Amounts paid for food, clothing, sport lessons, field trips and entertainment
- Overnight camp expenses
- Registration fees
- Transportation expenses
- Care for dependent while sick employee stays home
- Late payment fees
- Payment for services not yet provided (payment in advance)