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.

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