What is a Dependent Care Flexible Spending Account?

A Dependent Daycare FSA (DCA) refers to a reimbursement program that allows employees to set aside money, on a pre-tax basis, from their own pay through salary reductions. This money can then be used to pay for qualified dependent care, (daycare) expenses. Most participants use this program to pay for child daycare expenses however; it can be used to pay for adult daycare expenses as well.

What are eligible dependent care expenses?

Childcare expenses for children through pre-school and for after school care for Kinder up to age 13. Expenses may also be eligible for elder care as long as the expenses are not medical in nature, the qualified individual resides in your home for at least 8 hours a day and is a qualifying relative. Visit “What’s Covered?” on the Dependent Care FSA page.

What school expenses are eligible for reimbursement under a dependent care spending account?

Pre-school expenses are eligible. Kindergarten and elementary tuitions are not eligible. Visit “What’s Covered?” on the Dependent Care FSA page.

Which is better for me, a dependent care spending account or the dependent care tax credit?

For most people, a dependent care spending account offers the most savings however, this determination may only be made by reviewing all financial considerations and eligible tax deductions. Please contact your CPA, tax advisor or the IRS for specific guidance on your situation.