Dependent Care FSA

DEPENDENT CARE FSA


What is a Dependent Care FSA?

A Dependent Care Flexible Spending Account (DC FSA) can help you control your child care expenses while saving you money. If you and your spouse both work, or you are a single parent, a DC FSA may be right for you.

Here's how it works: you set aside money in your account before you pay taxes on it. When you set aside money in a DC FSA, you lower the amount of income the government will tax, so you pay fewer taxes each year.

 
                      
 

Increase your Take-Home Pay

Paying fewer taxes means you keep more of the money you make. In the example below, John and Carol estimate they will spend $5,000 on day care expenses for their child next year. Here's how they can save with a Dependent Care FSA:

 


   

Take Control of Your Dependent Care Expenses

You can use the money in your DC FSA to pay for day care, baby-sitting and general purpose day camps for your dependents under the age of 13. You can also use the funds to pay for adult day care services for dependent adults who are unable to care for themselves (if they live with you for at least 8 hours per day).

Maximum Contribution

  • $5,000 per year for married couples filing joint federal taxes or single caretakers
  • $2,500 for married couples filing separate federal taxes
 

 

Eligible Expenses
  • Qualified child care expenses for dependents under the age of 13
  • Adult day care services for dependent adults who are unable to care for themselves and live with you at least 8 hours each day
  • You will be reimbursed for eligible expenses as they are incurred and as funds are deposited into your account
  • Funds may not be used to pay for overnight camps, care provided by a dependent, spouse or child under the age of 19 and care provided while you are not at work

Tax Credits

If you participate in a DC FSA, you may not claim child care credits on your tax return. Before you enroll, you should evaluate the tax advantages for each option, as well as the impact on your tax liability and your ability to take advantage of the Earned Income Tax Credit.

More questions?

Visit our Frequently Asked Questions page for answers.

The savings amounts in the example above are provided by Surency for illustrative purposes only. You may save more or less based on your own tax situation. Some states do not recognize these tax exclusions for this program. No part of this website is tax, financial or legal advice. You should consult your own legal and tax advisers regarding your personal situation and whether this is the right program for you.