Budget for care costs, save on taxes
A DCFSA is a type of flexible spending account. It lets you set aside pretax dollars to pay for certain child and adult care services — services that allow you to work or look for work.
Expenses must meet the IRS definition of eligible dependent care services, such as:
- Daycare
- Nursery school or preschool
- In-home care, such as a babysitter or nanny
- After-school care
- Senior daycare
To qualify:
- The child or adult must live in your home at least 8 hours every day.
- You must claim this child or adult as a dependent on your income taxes.
- Children must be under age 13.
- Dependent adults must be unable to care for themselves.
Because a dependent care FSA isn't subject to payroll taxes, it's an easy way to save on eligible care services. How much you save depends on your tax rate.
Filing a claim is easy
When you're ready to file a claim, just sign in to your account and enter the requested information. Then submit your claim along with receipts or proof of payment. Receipts must include specific information that proves the payment was for qualified expenses, such as:
- The name and birth date of the person who received the service
- The person or provider that delivered the service
- A detailed description of the service
- The date and cost of the service
Dependent care flexible spending account (DCFSA) qualified expenses
- Adult day care center
- After-school program
- Babysitting (work-related, in your home or someone else's)
- Babysitting by your relative who is not a tax dependent (work-related)
- Before- or after-school program
- Childcare
- Custodial eldercare (work-related)
- Dependent or eldercare (while you work, to enable you to work or look for work)
- Eldercare (in your home or someone else's)
- Extended care (supervised program before or after regular school hours)
- Housekeeper who cares for child (only portion of payment attributable to work-related childcare)
- Nanny
- Nursery school
- Payment processing fees
- Payroll taxes related to eligible care
- Preschool
- Registration fees (required for eligible care, after actual services are received)
- Senior day care
- Sick childcare
- Summer day camp
- Total payments (transferred from previous administrator)
- Transportation to and from eligible care (provided by your care provider)
Eligible expenses are designated by the IRS. They include medical, dental, vision and prescription expenses. The examples listed above are not all-inclusive, and the IRS may modify its list at any time.
Consult your tax advisor or see IRS publication 502 or IRS publication 969 for more information.
- Activity fees
- Custodial eldercare (not work-related, for other purpose)
- Dance lessons
- Day nursing care
- Educational, learning or study skills services
- Field trips
- Household services (housekeeper, maid, cook, etc.)
- Kindergarten tuition
- Language classes
- Late-payment fees
- Meals, food or snacks
- Medical care
- Miscellaneous fees (diapers, clothing, etc.)
- Nursing home care
- Piano lessons
- Private school tuition (for kindergarten and up)
- Registration fees (required for eligible care, prior to actual services being received)
- School tuition
- Sleep-away camp
- Transportation to and from eligible care (not provided by your care provider)
- Tutoring