A Dependent Care FSA is used to pay for eligible dependent day care or elder care expenses. As a general rule, eligible dependent care expenses are those associated with the care provided to your eligible dependents while you (and your spouse if you are married) were either at work or looking for work, or so your spouse could attend school full-time.
Eligible dependents include:
- Children age 12 and under whom you will claim as exemptions for federal tax purposes
- A spouse who is physically or mentally unable to care for himself or herself
- A dependent who is physically or mentally unable to care for himself or herself, and for whom you can claim an exemption.
Eligible Dependent Care Expenses
Eligible Dependent Care FSA expenses include, but are not limited to, care provided by the following:
- Home-based licensed day care
- Licensed day care center (elder care or child care)
- Nursery school
- Private baby-sitter in your home or theirs
- Private preschool program
- Providers of care for disabled dependents
- Home-based licensed day care; or
- Public or private before-school and/or after-school programs for custodial care
- Public or private summer day camps
- Your child, age 19 or older, or any other individual you do not claim as a dependent on your income tax return
If you anticipate large expenses that are not listed, or you have other eligibility questions, contact PayFlex. You can also find a complete description of eligible dependent care expenses in IRS Publication 503, "Child and Dependent Care Expenses," available for download at irs.gov/pub/irs-pdf/p503.pdf.
- Baby-sitting so you can attend social events
- Care provided by your child under age 19 or any other person you claim as a dependent on your income tax return
- Cost of food, clothing, and diapers (unless such costs are incident to and cannot be separated from the cost of the care)
- Cost of transportation between your home and the place where dependent care services are provided
- Cost of specialty or educational before-school or after-school programs
- Expenses for overnight camps
- Expenses for which a dependent care tax credit is taken or expenses which are reimbursed under a Health Care Flexible Spending Account
- Expenses for education
- Late payment fees
- Placement fees for providing a dependent care provider
- Sports lessons, field trips and clothing
As you plan your dependent care expenses, consider these guidelines:
- You cannot use the Dependent Care FSA to pay for care of a qualifying person outside your home unless that person regularly spends at least eight hours per day in your home.
- Your expenses are reimbursable only if the dependent care is provided to make it possible for you, and your spouse if you are married, to work or look for work, or to enable your spouse to attend school full-time.
- You can only be reimbursed for care delivered in the calendar year. You incur expenses when the care is provided rather than when you are billed or when you pay for the care. You will not be reimbursed for expenses until after the care is provided.
- An eligible dependent care expense can be claimed on your income tax return or reimbursed from your FSA - but not both.
- If your dependent is a student, your expense may be different when school is not in session.
- Keep in mind you may only claim dependent care expenses for children age 12 and under. For example, if your 12-year-old child turns 13 in March, expenses incurred after March will not be reimbursable.
Determine Your Annual Contribution Carefully
Before enrolling in a Dependent Care FSA, use the PayFlex Dependent Day Care Expense Planning Worksheet to help determine your annual dependent care costs.
When determining your annual contribution, it may be helpful to estimate your expenses on a monthly basis, since the amounts may fluctuate throughout the plan year. For example, there may be times when you will not incur dependent care expenses, such as family vacations, school breaks, etc., or a time when your expenses will change, such as when your child reaches school age.
Make your estimates carefully. Once enrolled you will not be able to change your contribution amount unless you experience a qualified family status change. Refer to Making Changes to Your FSA for more information.
You may file a claim for reimbursement after your dependent receives the eligible services. You can only be reimbursed up to the amount that is available in your Dependent Care FSA.
You have the option of submitting a claim online or completing a paper claim form and mailing or faxing it along with your itemized documentation. See Submitting Claims for Reimbursement for details on filing claims.
File all claims by May 31 of the following year. According to IRS rules, any money left in your Dependent Care FSA on June 1 following the plan year is forfeited and turned over to the university for administrative fees.
Other Important Information
Submit your dependent care claim after services have been provided. If the expenses are eligible, all necessary documentation has been provided with your claim form, and contributions accumulated in your flexible spending account are equal to or greater than the amount of your claim, you should be reimbursed within ten business days from the date the claim is received by PayFlex.
Documentation that does not contain all the required information will be returned to you and may delay your reimbursement. For example, do not submit cancelled checks or statements showing only the previous balance, amount paid, or balance due.
Federal Form 1040
Amounts you contribute to a Dependent Care FSA will be reported on your W-2 Form. Complete and file an IRS Form 2441 with your federal income tax return.