Save with a Dependent Care Account

A Dependent Care Spending Account (DCA) allows you to set aside pre-tax dollars to pay for day care expenses when you and your spouse are at work.

Keep these things in mind:

• There is a $5,000 annual maximum per household.
• Record expenses for dependents children under age 13 who you claim on your taxes, or a disabled spouse or dependents of any age.
• To qualify, you and your spouse must be employed, looking for work, or your spouse must be a full-time student.
• Be conservative. If you don’t use the money in your account within the plan year, you lose it.
• Once the plan year has started, you cannot change your election unless there is an IRS-approved status change event.

Ineligible expenses:

• Costs already claimed as a dependent care tax credit on your income tax return
• Nursing home, respite care or other residential care centers
• Services provided by one of your dependents
• Nighttime babysitting expenses that are not work related
• Expenses while absent for work for more than two weeks at a time
• Costs paid to your own dependents, under age 19, who are caring for your own dependents
• Expenses paid for schooling for kindergarten or higher

IRS Publication 503 is your complete up-to-date guide on DCA related to your personal circumstances.