What is a Dependent Care (Daycare) FSA?
A Dependent Care Flexible Spending Account is an employer-sponsored benefit plan that lets you as an employee set aside pre-tax money on an annual basis to pay for qualified day care expenses incurred during that year. You decide how much you want to set aside each year, and a portion of that amount is deducted from each paycheck during the year. You can then submit a reimbursement request for eligible dependent care expenses. There is a statutory annual maximum contribution of $5,000 ($2,500 if married and filing separate returns) established by the IRS. Unlike the Health Care FSA, reimbursements may only be made up to the available balance as of the date the reimbursement request is made.
