A Dependent Care Flexible Spending Account (DC FSA) can help you save money on your child care expenses. 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, a married couple estimates they will spend over $5,000 on day care expenses for their child next year, so they elect to put $5,000 in their Dependent Care FSA. See how they can save money:
Out-of-Pocket Dependent Care Expenses
Savings Each Year
The savings amounts in the example 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.
Take Control of Your Dependent Care Expenses
You can use the money in your DC FSA to pay for day care, babysitting and general purpose day camps for your dependents under the age of 13 while you are at work. 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 eight hours per day).
Maximum Contribution (2018)
$5,000 per year for married couples filing joint federal taxes or single caretakers
$2,500 for married couples filing separate federal taxes
Qualified child care expenses for dependents under the age of 13 while you are at work.
Adult day care services for dependent adults who are unable to care for themselves and live with you at least eight 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.
How Does It Work?
Participating in a Surency Flex DC FSA plan is easy.
Once you’ve enrolled and set your annual election amount, that amount will be automatically deducted from your paycheck in equal increments throughout the year before you pay federal, state and FICA taxes on the designated amount.
Sign up for direct deposit within Surency’s Member Account. This allows for reimbursement to be directly deposited back into your bank account.
Once you’ve incurred $5,000 in dependent care expenses, fill out a claim form and have your child care provider sign it.
Submit the claim form to Surency.
With direct deposit enabled, Surency will automatically reimburse you by depositing your payroll deduction back into your account, up to the maximum or up to the amount you’ve elected. No additional receipts or claims are needed.
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.