DCAP Employee Overview

Another Valuable Benefit That Helps Reduce Taxes And Increase Spendable Income

The Dependent Care Flexible Spending Account (FSA) offers significant opportunities to reduce your taxes by paying for eligible dependent care expenses with pre-tax dollars.

Use the accompanying worksheet to estimate your dependent care expenses for the upcoming plan year. Be Careful: Remember that unused money in your account at the end of the year cannot be returned to you. Once you have made your benefit election for the plan year, you cannot change your election unless you experience a change in status or a cost/coverage change. 

Dependent Care FSA Guidelines

To be considered eligible for reimbursement under the Dependent Care Flexible Spending Account, the expense must meet the following guidelines:

1. The expense must be incurred for the care of an eligible dependent. Eligible dependents are individuals that spend at least eight hours a day in your home and include:

a. A child under age 13 for whom you have custody, even though a former spouse may claim the child for income tax purposes.

b. Any other dependent that is physically or mentally incapable of caring for himself or herself.

c. Your spouse, if physically or mentally incapable of self-care.

2. The service must be provided by a qualifying dependent care provider. Qualifying dependent care providers may include:

a. Dependent care centers. If the center provides care for more than six non-resident individuals, it must meet all applicable state and local regulations.

b. An individual who provides care inside or outside your home. However, a child of yours under age 19, or another individual for whom you claim a personal exemption, do not qualify as care providers.

c. Facilities for pre-school children.

d. A housekeeper whose services include, in part, providing care for a qualifying individual.

3. The dependent care expense must meet certain plan guidelines to qualify as an eligible expense. To be considered an eligible expense, the service must be:

a. Incurred during the current plan year and your period of coverage under the plan.

b. Provided for the care of a qualifying dependent or other related household services for the care of a dependent).

c. Incurred to enable you to work.

Note: If married, your spouse must also be working or looking for work; be a full-time student at least five months during the year while you are working; or be physically or mentally unable to provide his or her own care in order for the dependent care expense to qualify as an eligible expense.

 

Dependent Care FSA

The maximum contribution to the Dependent Care FSA for dependent care expenses is the lesser of:

	$5,000 ($2,500 if married and filing separately)
	Your earned income
	Your spouse's earned income. (If your spouse is a full-time student or disabled and has no earned income, the spouse is deemed to have an income of $200 per month for one dependent, or $400 per month for two or more dependents.)

Your Dependent Care Expenses

Subject to the guidelines indicated, estimate your dependents care expenses for the plan year:

Day care expenses	$
Disabled/elder day care	$
After school care	$
Total plan year dependent care expenses	$

 

How do I get reimbursed for eligible expenses?

The IRS regulations require you to provide: 

- The date(s) care was provided or incurred.

- The cost of the care.

- Your care provider's name and tax ID number.

- A signed receipt or invoice from provider. Canceled checks are not valid receipts.

- A completed form requesting reimbursement that is submitted to Dependent Care Flexible Spending Account administrator.

Now go to the Dependent Care worksheet to compute your potential tax savings.