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Dependent Care Reimbursement Account


 

Grace Period

FSAs have a "use it or lose it" policy, which means you forfeit any amounts unused and not reimbursed for services received during the Plan year. You may use what you set aside for the Plan year for services up to March 15 of the following year.

 


You can use the Dependent Care Reimbursement Account for the care of qualified dependents so that you (and your spouse if you are married) can work. Qualifying dependents include:

  • Children under age 13 you claim as dependents on your tax return.
  • Anyone age 13 or older who lives with you at least eight hours a day and needs supervised care, such as an elderly parent or a disabled child or spouse.


Expenses must be required so you and your spouse can work, or so you can work full-time if your spouse is a full-time student or disabled.

See IRS Publication 503 for information about eligible expenses, and use the Dependent Care Reimbursement Account Estimator to help you evaluate the tax savings and decide whether to participate.


You may set aside from $60 to $5,000 each plan year to cover eligible expenses during the year. The minimum annual deduction is $60. Your contributions come out of your pre-tax pay in equal installments each pay period. The amount you can set aside may be different based on your tax status.



Based on your tax status ... For the plan year, you can set aside …

If single or married filing jointly

up to $5,000

If married filing jointly and your spouse's employer offers a dependent care account

Up to $5,000 in total to the two accounts

If married filing separate returns

Up to $2,500

 

For the: You can use money set aside for expenses for care between: You must file your claims by:

2013 plan year

January 1, 2013 and March 15, 2014

April 15, 2014

2014 plan year

January 1, 2014 and March 15, 2015

April 15, 2015

Dependent Care Reimbursement Account vs. Dependent Care Tax Credit

The federal government offers a dependent care tax credit for your day care expenses - and you can't get the tax benefit of both the reimbursement account and the tax credit for the same expenses.

Think about what fits your situation best - the flexible spending account or the dependent care tax credit provided by federal law. Keep in mind that you cannot take the tax credit for any amounts that are reimbursed through the Dependent Care Reimbursement Account. In some cases, the tax credit may provide more savings than an FSA.

Dependent Care Reimbursement Account Dependent Care Tax Credit

You decide in advance how much to set aside for the coming year.

You wait until filing your tax return to determine your dependent care costs and decide whether you can take advantage of the tax credit.