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Dependent Care Dependent care expenses can rapidly take a significant chunk out of your family's budget. Fortunately, dependent care flexible spending accounts from take care, or DCFSAs, allow individuals to be reimbursed on a pre-tax basis for a variety of qualified childcare and adult dependent care expenses. The expenses paid for by a DCFSA must be necessary in order to allow you or your spouse to work, look for work, or attend school. Using Dependent Care Flexible Spending Accounts In general, FSAs function similarly to regular savings accounts. A certain amount of money to be set aside is determined at the beginning of the fiscal year. Payments are then divided among the various pay periods and money is taken from each paycheck prior to taxation. This provides additional tax savings since only the remaining balance is taxed. Money in FSAs can only be used for specific medical expenses. In the case of dependent care flexible spending accounts, the restrictions are even greater. Health FSAs and DCFSAs are entirely different accounts and money from one account cannot be used for the expenses earmarked for the other. In either case, it is essential to properly consider the amount of money to be placed into these accounts, as any leftover funds are usually forfeited at the end of the year. The types of expenses that are eligible for payment with a DCFSA are items such as daycare, nursery school fees, or at-home childcare. Although there are a number of rules governing these accounts, individuals typically qualify if they have a child under the age of 13 claimed as a deduction, or a child, spouse or dependent that cannot take care of themselves due to physical or mental disability. Finally, a DCFSA can be used by single parents or married parents who are unable to provide care due to work, school or are physical and/or mental disability. |
Additional Topics Consumer-Directed Health Plans Consumer-Driven Health Accounts Flexible Health Spending Accounts Flexible Medical Expense Accounts Health Care Flexible Spending Accounts Health Reimbursement Arrangements IRS Section 125 Cafeteria Plans Medical Expenses and Income Tax Plan for Medical that Health Insurance Doesn't Cover Save 25% to 40% on Health Expenses Save on Co-Pays and Over-the-Counter Medications Save on LASIK and Orthodontic Costs Section 125 Plan Administration |
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