Q: What is a Dependent Care FSA? Who and what is covered?
A: A Dependent Care FSA (DCFSA) lets you use tax-free money to cover child care or adult dependent care. You or your spouse must be working, searching for work, or attending school full-time in order to qualify for the DCFSA.
Note: A Dependent Care FSA should not to be confused with a Health Care FSA, which allows you to pay for qualified health care expenses.
Who is covered?
To qualify as employment-related expenses, care must be for a qualifying individual. A “qualifying individual” means:
- A dependent under age 13.
- A dependent of the taxpayer (i.e., a qualifying child or qualifying relative could be an older relative) must be physically or mentally incapable of caring for himself or herself, and have the same residence as the taxpayer for more than half of the year.
- The taxpayer’s spouse. If the spouse is physically or mentally incapable of caring for himself or herself, and has the same residence as the taxpayer for more than half of the year.
*Individuals covered must be claimed as dependents on your federal income tax return. Read more specific details here.
Which expenses are covered?
- Before- and after-school care.
- Adult care of a relative who spends at least eight hours a day at your home.
- Child care at a day camp, nursery school, or by a private sitter (or by a non-tax dependent relative). Babysitters cannot also be claimed as dependents (an older relative must be at least 18 years old).
- Adult day care center.
- Transportation by caregivers.
- Expenses for a housekeeper who also handles dependent care.
- Day camps.
- Late pick-up fees.
Expenses not covered:
Any care that is not work-related will not be covered under your DCFSA.
- Overnight camps
- Long term care (nursing home)
- School tuition or education fees
- Meals or food
Dependent Care Finances
- The maximum you can contribute to a DCFSA per year is $5,000 per household, or $2,500 if married and filing separately.
- You will only be paid out for the amount available in your DCFSA (even if your actual dependent care expenses exceed that amount). Money from a Dependent Care FSA is only available to you once taken from your paycheck.
- You cannot make a claim for dependent care expenses if you are unemployed. You or your spouse must earn income.
Details of the plan vary per employer. It’s best to check in with your benefits administrator on what the limits, rules, and specifications for your DCFSA plan are. Your Summary Plan Description provides additional information.
Find out more about flex spending accounts via our FSAstore.com Learning Center.