FAQs about Dependent Care
Is $5,000.00 per calendar year the maximum dollar amount that my family may contribute to a Dependent Care Assistance Program, or may I contribute $5,000.00 with my employer's plan while my husband contributes additional dollars to his employer's plan?
The $5,000.00 per calendar year maximum is per family (if allowed by your employer’s plan). Click here for more information.
If I have one child, I may take a tax credit of up to $4,000.00 for eligible Dependent Care expenses. If I have two or more children, I may take credit of up to $8,000.00. My questions is, how do I know which is a better tax advantage for me?
Remember that it is always best practice to consult a tax professional for your particular circumstances. However, TaxSaver Plan can provide you with a copy of IRS Form 2441 Child and Dependent Care Expenses if needed. You should also contact a tax professional for assistance with completing this form.
Is kindergarten a reimbursable expenses under a Dependent Care Assistance Program?
No, kindergarten is not a reimbursable expense under a DCAP.
Are canceled checks acceptable forms of receipt for DCAP's?
No. An acceptable receipt would be a receipt signed by the provider, stating the dates of care, cost of care and the dependent(s) name(s).
Why should I elect to participate in a Dependent Care Assistance Program offered by my employer instead of taking tax credit when I file my income taxes?
The reason may be tax savings. Remember that Dependent Care elections cover child day care, not dependent health care. You can also find more information here.
My parents are coming for a visit this summer and they would like to take care of our kids while they are here. I would like our kids to spend time with their grandparents, so I intend to remove them from day care for the summer. I would, therefore, like to stop my deductions for the Dependent Care Assistance Program. May I do this?
A visiting relative does not qualify as a reason to change, or revoke, your election. You may, however, pay your parents the fee that you are paying your current provider, as long as you do not claim your parents as legal tax dependents.
My husband's mother retired last week, and she has offered to watch our children during the day while we are at work. I currently have the children enrolled in a day care facility and I am participating in the Dependent Care Assistance Program offered by my employer. I would like to drop my Dependent Care Assistance Program election. May I do this?
Yes, you may drop your election.
My day care provider charges $5.00 per week for snacks and a $10.00 monthly supply fee. Is this a reimbursable expense under my employer's Dependent Care Assistance Program?
No, itemized costs like food, supply fees, transportation fees are not reimbursable under a Dependent Care Assistance Program.
In March, I must pay $200.00 to secure my son's space in summer day camp. This $200.00 is applied to the cost of the camp. May I be reimbursed in March for this expense?
No, but you may be reimbursed for the $200.00 once the camp begins. The cost of the service must be incurred in order to be reimbursed. Any changes or cancellations regarding summer camps can also be an eligible reason to change your DCAP election prospectively.
As part of my daughter's summer care, I have enrolled her in a piano camp, as well as a swimming camp. Are these expenses reimbursable under the Dependent Care Assistance Program?
Yes, expenses like these camps are reimbursable for summer care. Remember that summer school programs that offer educational courses for credit towards courses that are required by the state that you live in for graduation are NOT reimbursable.
My son's after school provider offers a soccer camp for an additional $20.00 per week. Is the soccer camp a reimbursable expense, or is only the cost for the after school care reimbursable under the Dependent Care Assistance Program?
The charge for the soccer camp would not be reimbursable, as it is not a part of the after-school care, but secondary to the care.
The Day Care Expenses for my children total $12,000 a year. My husband and I may be better off participating in the Dependent Care Spending Account Plan that my employer offers from a tax standpoint. If we are only allowed to set aside $5,000 pre-tax dollars under this Plan, may we take additional tax credit when we file our income taxes?
Yes, you may take the additional tax credit when you file your income taxes at year end.
My divorce decree states that my ex-spouse can claim our daughter as an exemption on alternate years. I am the custodial parent and pay child care expenses. Can I claim child care expenses on the years he takes the exemption?
The Child and Dependent Care Credit can only be claimed by the custodial parent. This is true even if you cannot claim the child’s exemption because the divorce decree allows the other parent to claim the exemption, or you have released the exemption on Form 8332.
I am thinking of having a family member baby-sit for my child full time in their own home while I work. Are either of us responsible for taxes on the money I would pay? Can I claim this money as a child care expense even though my family member is not a registered day care provider?
You may have qualified child care expenses, if the family member is not your dependent or your child under the age of 19 and you meet all the tests to claim the Child and Dependent Care Credit. Your family member will be responsible for paying taxes on the money earned and will be considered to be self-employed.
I am planning on a leave of absence from my job this year. When I go out on leave, is it possible to continue my Dependent Care Account through my Employer?
While you are out on leave, you may continue to contribute to the Dependent Care Account if you are on a paid leave. However, any expenses that you incur while on leave will not be reimbursable. For example, if you are going out on paid leave for the month of April to care for a parent that is ill, you will still have child care expenses. The pre-tax deductions are still being taken from your pay each pay period and are building in your account. When you submit a receipt for child care expenses incurred during April, the claim will not be reimbursed. You may be reimbursed those dollars deducted in April when you return to work and have qualified day care expenses.
How are Dependent Care claims reimbursed?
A participant in the Dependent Care Account will never be reimbursed more than they have contributed to the Plan at any given time during the Plan Year. Much like a bank account, claims remain pending until more dollars are contributed to the account.This is often referred to as the ‘cash in/cash out’ rule.
I am now able to work from home and no longer have a need to take my child to the day care center. Is this a reason to stop my day care FSA?
Yes. Your day care FSA contributions can be raised, lowered, or stopped due to changes in your dependent care needs.