Dependent Care FSA

Dependent Care FSA

A dependent care FSA is a great way to pay dependent care expenses and lower your taxable income. Here's how it works:

• You direct part of your before-tax pay into a special account to help pay work-related dependent care costs
• You can use your account throughout the year to help pay for eligible expenses
• Your expense must be for the purpose of allowing you and, if married, your spouse to be employed

Explore these topics to learn more:

• Qualifying Dependents
• Tax Savings
• Your Contribution
• Getting Reimbursed
• Your Dependent Care FSA and Tax Credits
  

Qualifying Dependents

A dependent care FSA helps reimburse you for the work-related cost of care for a qualifying dependent. A qualifying dependent is:

• A tax dependent of yours who is under age 13 , or
• Any other tax dependent of yours, such as an elderly parent, who is physically or mentally incapable of self-care and has the same principle residence as you
• A spouse who is physically or mentally incapable of self-care and has the same principle residence as you

For additional information, refer to Publication 503 on the IRS website at www.irs.gov for more information.

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Tax Savings

A dependent care FSA offers a way to better manage dependent care expenses and gain real tax savings. Your actual savings will depend on several factors, including your:

• Income
• Tax bracket or amount of income taxes you pay
• Yearly dependent care expenses

For example, let's say your:

• Income is $40,000 annually
• Tax bracket is 15 percent, and
• Estimated dependent care expenses are $5,000

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