Department of Management Services

Dependent Care FSA

What is a Dependent Care FSA?

It is a type of savings and spending, flexible spending account that allows you to reimburse yourself with pretax dollars for eligible expenses you pay to take care of a qualified dependent.

How It Works

You can use the dependent care FSA for the care of qualified dependents so that you (and your spouse if you are married) can work. Qualifying dependents include:

  • Children under age 13 you claim as dependents on your tax return.
  • Anyone age 13 or older who lives with you at least eight hours a day and needs supervised care, such as an elderly parent or a child or spouse with a disability.

Expenses must be required so you and your spouse can work, or so you can work full-time if your spouse is a full-time student or disabled. 

Be sure to review the Benny® prepaid benefits card page and frequently asked questions (Adobe PDF Document 194.72 KB).

See IRS Publication 503 (Adobe PDF Document) for information about eligible expenses, and use the tax savings calculator to help you evaluate the tax savings and decide whether to participate.

You can set aside $60 to $5,000 each plan year to cover eligible expenses during the calendar year. Your contributions come out of your pre-tax pay in equal installments each pay period. The amount you can set aside may be different based on your tax status.

 

Based on your tax status ... For the plan year, you can set aside …
If single or married filing jointly up to $5,000
If married filing jointly and your spouse's employer offers a dependent care account Up to $5,000 in total to the two accounts
If married filing separate returns Up to $2,500

The federal government offers a dependent care tax credit for your day care expenses - and you can't get the tax benefit of both the reimbursement account and the tax credit for the same expenses. Dependent care FSA vs. dependent care tax credit

Think about what fits your situation best - the flexible spending account or the dependent care tax credit provided by federal law. Keep in mind that you cannot take the tax credit for any amounts that are reimbursed through the dependent care FSA. In some cases, the tax credit may provide more savings than an FSA.

 

Dependent Care FSA Dependent Care Tax Credit
You decide in advance how much to set aside for the coming year. You wait until filing your tax return to determine your dependent care costs and decide whether you can take advantage of the tax credit.

Grace Period

FSAs have a "use it or lose it" policy, which means you forfeit any amounts unused and not reimbursed for services received during the Plan year. You may use what you set aside for the Plan year for services up to March 15 of the following year.