Dependent Care
Q. Am I eligible to enroll in the Dependent Care Flexible Spending Account?
To be eligible you must be at work during the time your eligible dependent receives care. You must also meet one of the following eligibility guidelines:
You are a single parent or guardian
You have a working spouse or a spouse looking for work
Your spouse is a full-time student at least five months during the year while you are working
Your spouse is physically or mentally unable to provide for his/her own care
You are divorced or legally separated and have custody of your child even though your former spouse may claim the child for income tax purposes
Q. Who is an eligible dependent?
Your dependent care expenses must be for a qualifying individual who spends at least eight hours a day in your home and is one of the following:
Your dependent under the age of 13 for whom you can claim an exemption.
A child under the age of 13 for whom you have custody if you are divorced or legally separated
Your spouse who is physically or mentally incapable of self-care
Your dependent who is physically or mentally incapable of self-care, If you cannot claim an exemption for the person for income tax
Q. What expenses are eligible for reimbursement under the Dependent Care FSA?
Dependent care, inside or outside your home, by anyone other than your spouse, a person you list as your dependent for income tax purposes or one of your children under the age of 19 in a dependent care center or a child care center. (If the center cares for more than six children, it must comply with all applicable state and local regulations)
Dependent care by a housekeeper whose services include, in part, providing care for a qualifying individual.
Q. Can I pay my in-home daycare provider through the Dependent Care FSA?
Yes. You can be reimbursed from your Dependent Care FSA for any qualified daycare expense, whether performed in your home, the provider's home or a daycare center. The caregiver's Social Security number or tax identification number must be included on the Claim Form. You will also need to provide receipts for the expenses or have your provider sign the completed Claim Form.
Q. My dependent care provider doesn't claim the income as earnings. Can I use the dependent care account?
You can, but you will need to report the Social Security or tax identification number of your provider, along with the amount paid and benefits received, on Form 2441 to accompany your federal income tax return. As a result, your provider will have to pay taxes on that income.
Q. My ex-spouse claims our child as a deduction for tax purposes, but I pay for child care. Can I use the Dependent Care FSA?
During the time of the year the child resides with you, you can use the dependent care account to pay for child care services
Q. Can I use both the Dependent Care FSA and the federal Child and Dependent Care Credit?
Expenses reimbursed from a Dependent Care FSA reduce the amount you can claim under the federal income tax credit. You will have to determine which approach is best for you. Keep in mind the tax savings derived through participation in a Dependent Care FSA are realized throughout the plan year versus once on April 15.