Skip to main content
All CollectionsMember resourcesAll About FSAs
Getting started with your dependent care FSA
Getting started with your dependent care FSA

How do flexible spending accounts for dependent care expenses work?

Updated over 8 months ago

A dependent care flexible spending account or DC-FSA is an arrangement through your employer that lets you pay for eligible dependent care expenses with tax-free dollars.

Eligibility

It's simple to have a Dependent Care FSA—your employer just needs to offer it!

For eligibility in using the funds, you must have a dependent who is:

  • A child under age 13;

  • Your spouse or other tax dependent (regardless of age) who is mentally or physically incapable of self-care.

The care expenses being claimed must meet the following conditions:

  • is not for your dependent's health care expenses

  • incurred in order for you and your spouse to

    • work

    • look for work, as long as you found a job and have earned income

    • attend school full-time

  • the expense is not for someone you can claim as your dependent on your federal income tax return or to your child who is under age 19

  • you file taxes as single, qualifying widow(er) with a dependent child, married filing jointly, or married filing separately

  • the expense was provided for one or more qualifying persons identified on the claim.

  • your qualifying dependent must live in your home for more than half of the year

  • must not be claimed under the Dependent Care Tax Credit

Limits

Family - Maximum Contribution

Married, Filing Separately - Maximum Contribution

2023

$5,000/yr

$2,500/yr

2024

$5,000/yr

$2,500/yr

While rollover is not allowed for Dependent Care FSA, some employers may choose to allow up to a 2.5-month extension to the DC-FSA spending deadline.

Eligible DC-FSA Expenses

Expense

Requirements/Limitations

Nursery school/Preschool

Must be:

  • licensed care facility

Before/After school program

Must be:

  • work-related

Au pair

Babysitting/Nanny

Must be:

  • work-related

Can be:

  • in your home or someone else’s home/another location

  • by a relative who is not a tax dependent

Extended care

Must be:

  • work-related

  • a supervised program before or after regular school hours

Day Camp

Sick child care

Adult/Senior daycare

Eldercare

Can be:

  • in your home or someone else's home/another location

Housekeeper who cares for your dependent

Limited to:

  • the portion of the payment attributable to work-related dependent care

Payroll taxes

Must be:

  • related to eligible care in this list

Payment Processing Fees

Must be:

  • related to eligible care in this list

Transportation (to/from)

Must be:

  • related to eligible care in this list

  • provided by a care provider

Ineligible DC-FSA Expenses

Expense

Details

Educational Costs / School Tuition

While nursery and preschool expenses are eligible, educational costs or school tuition (i.e., kindergarten, summer school, tutoring, school tuition) are not eligible expenses. The 'educational' aspect of nursery and preschool costs is only incidental per the IRS.

Overnight Camp

Is ineligible even if the day camp portion is billed separately.

Food and clothes

Is ineligible even if it's for your dependent.

DC-FSA and the Dependent Care Tax Credit

If you have dependents, chances are you may have heard of the Dependent Care Tax Credit or DCTC. DCTC allows taxpayers to claim tax credits for dependent care expenses.

You can take advantage of a Dependent Care FSA and the Dependent Care Tax Credit to save more; however, you are not allowed to claim an expense on both.

You can either use DC-FSA funds or claim a tax credit under DCTC for out-of-pocket dependent care expenses.

Did this answer your question?