Dependent Care Spending Accounts
Why Choose a DCSA?
In many cases, DCSAs can provide greater reimbursement than the Federal Dependent Child Tax Credit Program (DCTC). NOTE: Participants should check with their accountant to verify their maximum credit.
Additionally, it can reimburse custodial expenses for adult dependents who are incapable of self-care. The DCSA provides benefit throughout the year, unlike the DCTC, which provides benefit only when your taxes are filed.
What Expenses Are Covered?
- Preschool charges
- Before- and after-school care
- In- and out-of-home care for children or the elderly
How Do Reimbursements Work?
Participants are reimbursed with tax-free dollars from their account after they submit a completed reimbursement form for an eligible expense, along with a paid receipt for services and the social security number or tax ID number of the provider. Participants cannot receive more than their current balance at any time. At year's end, the participant will be required to produce the name, address and social security of their dependent care provider on their income tax return.
Eligible dependent care expense reimbursement is limited to the participant's earned income if they are not married, or the lesser of the household's earned income or that of the participant's spouse if they are married, up to a maximum reimbursement of $5,000.
Change in Status
Participants can change their plan elections if they experience a change in status, including marriage, divorce, birth of a child, death of a child or spouse, adoption, change of employment by spouse, or change in care provider. Any change in election must reflect the change in status.