How does a dependent care FSA work?
What is a dependent care FSA?
A dependent care FSA is a flexible spending account that allows you to contribute a portion of your paycheck before taxes are taken out to pay for qualified dependent care expenses so that you can work or look for work.
What are the benefits of a dependent care FSA?
Tax Benefits
With a dependent care FSA, contributions to the account are deducted from your paycheck before income taxes are assessed, so your taxable income is reduced. Participants could enjoy up to 30%* average tax savings on the total amount they contribute to the account.
*For illustrative purposes only. Savings calculations are based on a federal tax rate of 15%, state tax rate of 5%, and 7.65% FICA.
What expenses are considered eligible?
You can save up to 30%* on many of the dependent care services you may already be paying for
Qualifying Dependents
You can use your dependent care FSA to pay for care for children under age 13 that you claim as dependents, as well as adults or other relatives that are incapable of caring for themselves (if you provide more than 50% of their support). Please consult your tax professional for more information on other individuals that may qualify as dependents for purposes of the FSA.
Eligible Care
An Eligible Care expense must be for the purpose of allowing you to work or look for work. Services may be provided at a child or adult care center, nursery, preschool, after-school, summer day camp, or by a nanny in your home.
*For illustrative purposes only. Savings calculations are based on a federal tax rate of 15%, state tax rate of 5%, and 7.65% FICA.
How can I contribute to my dependent care FSA?
Payroll Contribution
Once you make your annual election during open enrollment, your employer will deduct this amount from your paycheck before taxes are assessed throughout the year.
Adjusting Contributions
Typically, you cannot change your contribution mid-year. However, if you experience a change in status, such as the birth of a new child, you may be able to adjust your contribution. Check with your employer for details of your plan.
Contribution Limits
The IRS limits annual contributions to $5,000 for single or married filing jointly, and $2,500 for married filing separately.
Funds Availability
You only have access to dependent care FSA funds that have already been deducted from your paycheck.
How do I access my dependent care FSA funds?
Using Funds
You are able to pay directly from your account using a benefits debit card, if available. It can be used anywhere debit cards are accepted. You may also use online bill payment to pay for expenses or to submit a claim to reimburse yourself for a qualified out-of-pocket expense. If you pay for dependent care expenses out of pocket, you’ll need to file a reimbursement claim.
How do I enroll into my employer’s Dependent Care FSA program?
Paper Form
Download the FSA Election Form and decide how much you would like to elect for your upcoming plan year. Complete the form and return to your Human Resources department.
Open Enrollment Portal
Ask your Human Resources department or other appointed staff member at your employer to provide access to the open enrollment portal, which allows you to log in to your participant portal and make a paperless election online. Download the open enrollment portal instructions to learn how to navigate the portal. Should you need further assistance contact gente at (973) 995-1000.
