Dependent Care Flexible Spending Account
You can be reimbursed for expenses for day care and household services incurred in a plan year, as long as the expenses are necessary to allow you and your spouse—if you're married—to work, look for work, or attend school full time.
Your dependent care expenses must be for:
- A dependent child who is under age 13 for whom you can claim an exemption on your tax return.
- A dependent or spouse who is physically or mentally incapable of caring for himself or herself. If the dependent care services are provided outside your home, the spouse or dependent must live in your home at least eight hours each day in order to qualify.
These services may be provided inside or outside your home by individual day care providers or eligible day care centers. Services may not, however, be provided by someone you claim as a dependent on your tax return.
The maximum benefit you can receive for day care expenses from this plan is the lesser of $5,000, the amount of your annual salary or your spouse's annual income. Special rules apply if your spouse is disabled or a full-time student.
Expenses that cannot be reimbursed through the Dependent Care FSA include:
- Food, clothing, or entertainment for a dependent
- Expenses for overnight camps
- Nursing home expenses, unless the dependent spends at least eight hours a day in your household
In addition, if you are on an unpaid leave of absence for longer than two weeks, you may not claim reimbursement for dependent care expenses you incur during your absence.
You must submit your claims for any eligible day care expenses in the plan year the expenses were incurred or by March 31st of the following year. Your claim must include the name, address, and taxpayer identification number (or Social Security number of an individual) of your day care provider. Canceled checks cannot be used to support your claim unless services are provided by a relative. All reimbursements will be paid directly to you and not to your day care provider. These reimbursements remain tax-free.
On or before January 31, you will receive a written statement for the amounts that were reimbursed to you in the preceding calendar year. If you pay for dependent care expenses through the Dependent Care FSA, you cannot claim them as a dependent care tax credit when you file your income tax return. In addition, if you plan to file for a tax credit on day care expenses over the amount in your Dependent Care FSA, certain rules apply. The plan administrator can give you more information. You may want to talk with a tax advisor to help you decide what's best for your situation.