Frequently Asked Questions
- Who is eligible for the dependent care spending account?
- Does my daycare provider have to be licensed in order to participate in the dependent care FSA?
- How much can i contribute to the dependent care spending account?
- What types of expenses are eligible under Dependent Care FSA?
- What types of expenses are not eligible under the Dependent Care FSA?
- In what situation can I change my contribution to the dependent care account during the plan year?
- What documentation is needed for dependent care reimbursement?
- Which dependents are eligible for the dependent care spending account?
1. Who is eligible for the dependent care spending account?
If you are married, you can use the account if you and your spouse work or, in some situations, if your spouse goes to school. You can also use the account if your spouse is disabled and unable to care for the children. Single employees can also use the account.
2. Does my daycare provider have to be licensed in order to participate in the Dependent Care FSA?
Generally No. The daycare provider you use must claim the money they receive for providing their service as income. If you participate in the Dependent Care FSA, the IRS will require you to report the Taxpayer Identification Number or Social Security Number of the provider on your federal tax return. Flex Administrators also requires this information to be provided on the Mandatory Statement for Daycare that is completed each plan year.
3. How much can I contribute to the Dependent Care FSA?
The Dependent Care FSA allows you to contribute to a maximum of $5,000 pre-tax for one or more qualifying dependents. If you do not participate in the Dependent Care FSA, the maximum benefit available through the tax credit when you file your taxes is $3,000 for one dependent and $6,000 for two or more qualifying dependents. If you have two or more qualifying dependents you are allowed to use the maximum of $5,000 through a Dependent Care FSA, and then also see if you qualify for a maximum of $1,000 tax credit when you file your taxes (the difference between the $6,000 tax credit and the $5,000 Dependent Care FSA).
Please take a moment to go through the dependent care calculator on our website to see which is more beneficial for your family
4. What types of expenses are eligible under Dependent Care FSA?
- Care provided inside or outside the participant's home by anyone other than: your spouse, a person you list as your dependent for income tax purposes, or one of your children under age 19.
- If your dependent is in kindergarten or higher grades (through age 12), the cost of schooling must be separated from the cost of care.
- A dependent care center or child care center (if the center cares for more than six children, it must comply with all applicable state and local regulations).
- A housekeeper, an au pair, or nanny whose services include, in part, providing for a qualifying dependent.
- Day care costs while in day camps
- FICA and FUTA taxes
- Preschool or nursery schools
5. What types of expenses are not eligible under the Dependent Care FSA?
- Babysitting for social events
- Educational expenses for a child in kindergarten or higher
- Charges for an overnight camp
- T-shirt charges for camp or daycare facility
- Transportation expenses
- Food expenses
- Expenses that you might take as a child care tax credit on your tax return
6. In what situation can I change my contribution to the dependent care account during the plan year?
- When the dependent ceases to qualify as a dependent (i.e. the child attains age 13)
- When the employee switches to a new dependent care provider
- When the cost of dependent care increases or decreases. However, a mid-year election change due to cost where the dependent care provider is a relative of the employee is not allowed.
7. What documentation is needed for dependent care reimbursement?
A receipt signed by the dependent care provider must accompany all dependent care requests for reimbursements. This receipt must show the dates the daycare was provided, the name of the child who received the care, the name of the person making the payments and the payment amount.
You can make up your own receipts leaving the dates and amounts blank for your daycare provider to complete. (The receipts don’t have to be formal-see example below.)
click this image to download a full-page of receipts
The dependent care account can only reimburse with funds deposited into the account (deductions withheld from your paycheck). If there are not funds available when you submit a claim, we will enter it into our system. As soon as additional funds are deposited, a check will be issued. If the amount of your expense was more than your account balance, the excess part of your claim will be carried over to the next pay period, to be paid out, as your account balance becomes adequate.
8. Which dependents are eligible for the dependent care spending account?
- An individual who qualifies as a dependent for income tax purposes and;
- Under the age of 13, or physically or mentally unable to care for himself/herself or;
- Your spouse or other dependent (parent) who is physically or mentally unable to care for himself/herself. This person must spend at least 8 hours a day in your home.