If a dependent care flexible spending account (FSA) is part of your benefits package, it lets you use pre-tax dollars to pay for eligible, employment-related dependent care expenses for your dependent children or relatives. Find more details on our Dependent Care FSA page.
Employees with young children or dependent relatives, who are considered “qualifying individuals,” can benefit from dependent care FSAs. Setting aside pre-tax dollars means you pay fewer taxes and increase your take-home pay by your tax savings. You save money on expenses that you are paying for out of your pocket. The amount you save depends on your tax bracket.
For example, if you are in the 30 percent tax bracket, you can save $30 on every $100 spent on eligible expenses such as day care, after-school care, elder day care and much more. Learn how your savings can add up on our FSA Savings Examples page.
A qualifying individual is:
Having a dependent care FSA depends on if you are the custodial parent or not.
To be an eligible dependent care FSA expense, the care provided to your dependent must be so you (and your spouse if you’re married) can work or look for work. “Work” may include actively looking for a job, but it doesn’t include unpaid volunteer work or volunteer work for a nominal salary. Your spouse is considered to have worked if he or she is a full-time student for at least five calendar months during the tax year or if he or she is physically or mentally not able to take care of him or herself.
Fees you pay for dependent care when you aren’t working because you’re sick generally are not eligible for reimbursement. But, there is an exception to this rule. Temporary absences from work may be disregarded if you have to pay for dependent care expenses during your illness. Whether an absence is for a short time depends on the situation, but as a rule, the IRS says that an absence of up to two weeks in a row due to illness or vacation is a short-term or temporary absence.
As a rule, you must allocate (divide) expenses between the days you work and the days you don’t. However, if you work part-time but are required to pay for dependent care expenses for a specific time frame (including non-working days), you do not have to allocate expenses between days worked and days not worked. Check out examples on our Dependent Care FSA Participant Guidelines page.
A dependent care FSA covers qualified dependent care expenses incurred for the care of one or more eligible dependent children or relatives. Typical eligible expenses include:
Ineligible expenses include the following:
Check out a list of eligible and ineligible expenses on our Dependent Care Eligible Expenses page.
The amount you put into an FSA is called an “election,” and your election can’t be more than the maximum amount set by the IRS. Currently, the maximum amount is $5,000 each plan year. However, if you’re married and file separate tax returns, the maximum amount is $2,500.
Although the maximum limit is $5,000 at this time, your maximum yearly contribution amount cannot exceed the earned income limit. If you are single, the earned income limit is your salary (excluding your contributions to the dependent care FSA plan). If you are married, the earned income limit is the salary that is the lowest – either your salary (minus your dependent care FSA contribution) or your spouse's salary.
No. If you are married and file a joint tax return, your combined maximum election amount is $5,000. As mentioned, if you are married but filing separate tax returns, the maximum amount is $2,500. Expenses reimbursed under your dependent care FSA can’t be reimbursed under your spouse's dependent care FSA and vice versa. You can’t “double-dip” from both accounts for the same expenses.
No. Tuition fees for kindergarten or first grade and above aren’t eligible expenses under a dependent care FSA. However, expenses for before-school care, after-school care, and nursery school are eligible if the care is mainly custodial (care or services for basic needs).
No. To be an eligible expense, the care must be provided to a qualifying individual. A child age 13 or older isn’t a qualifying individual.
Yes. You must identify all people or organizations that provide care for your child or dependent. You do this by filing IRS Form 2441- Child and Dependent Care Expenses along with your Form 1040 each year (or Schedule 2 for Form 1040A).
Please Note: The IRS may change these requirements, so talk to your tax advisor for more details.
No. You may not claim any other tax benefit for the tax-free amounts received by you under the dependent care FSA, even though the balance of your eligible, work-related dependent care expenses (if any) may be eligible for the dependent care credit. Talk to your tax advisor to get more details.
You should file your claim for the actual amount of the expense – in this case, it’s $500. The maximum reimbursement you can get is equal to the current account balance in your dependent care FSA. If your request for reimbursement is more than the available balance in your dependent care FSA, the remaining amount will be put on hold and paid when funds are in your account.
The IRS has a "use-it-or-lose-it" rule. It requires that all money you put into your FSA must be used to reimburse qualified expenses incurred during that plan year. Funds that are left over after the plan year ends are forfeited. The unused portion of your dependent care FSA cannot be paid to you in cash or other benefits. You can’t transfer money between FSAs. To reduce the risk of losing money at the end of your plan year, carefully estimate your expenses when choosing your annual election amount.
Your employer chooses the reimbursement schedule. For details about your FSA, see your employer’s Summary Plan Description (SPD).
Just log in to your online account to find it.
If the employee and provider certifications on the reimbursement request form are filled out and signed, you don’t need to do anything else. If the provider certification is not completed and signed, you must submit an itemized statement from your dependent care provider. This statement must have the date(s) of service, the name(s) and date(s) of birth of your dependent(s), an itemization of charges, and the provider's name, address, and Tax ID or Social Security number.
Your FSA information is available anytime day or night by logging it to your online account.
It depends on the rules for your employer’s FSA. With some FSAs, you can spend the money until the last day of the plan year. After that date, you forfeit any money left in the account. But some employers give more time to use the FSA funds after the plan year ends.
Even if you have a run-out period or grace period, it’s important to plan carefully when you decide how much to put in your FSA. Don’t think of the grace period as an extension of the plan year. It’s more like a cushion in case your expenses fall a little short of what you expected. Find more information on our Run-out and Grace Period page.
Not all plans include a run-out period or grace period, and the length of time can vary. For more details about the deadlines for your employer’s FSA and when you can file claims, check your Summary Plan Description.
Please Note: Unlike a health FSA, a dependent care FSA can't have a carryover feature.
Your election can’t be changed during the plan year unless you have a change in status or other qualified event – that’s an event defined by IRS rules – and your employer's plan must allow the change as well. Learn more on our Dependent Care FSA Participant Guidelines page.
If you stop working for your employer or you lose your FSA eligibility, your plan participation and your pre-tax contributions will end automatically. Expenses for services you have after your termination date are not eligible for reimbursement.
In some cases, your dependent care FSA plan may include a “spend-down” provision. If so, you can submit dependent care expenses incurred after your work termination, if you meet all other participation requirements. This feature is not available in all plans. Please see your Summary Plan Description for specific rules that apply to your plan.