Tax Advantage Accounts
Dependent Care Flexible Spending Account
You may use a Dependent Care Flexible Spending Account (FSA) to be reimbursed for day care expenses for your dependents so that you and your spouse, if you are married, can work or attend school.
By using the FSA, you can be reimbursed for dependent day care expenses for:
- Your dependent children including your biological children, adopted children or stepchildren, up to age 13.
- An elderly parent, spouse, or child who is incapable of self care, who spends at least eight hours a day in your home and is dependent on you for support.
Dependent Care FSA: Use It or Lose It
Tax advantage accounts have certain tax advantages. Therefore, the IRS regulates all tax advantage accounts. By law, any funds not used for services during the year will be lost. In other words, you need to use the money in your account or you'll lose it. See the www.irs.gov website for the complete list of qualified expenses, Publication 502.
Amount Available for Reimbursement
Dependent Care FSA funds are available only when you have these funds in your account. For example: if you submit a claim for $1,000, but have only $300 available in your FSA, you will only be reimbursed $300.
Tax Information
- IRS regulations govern the administration of all spending accounts and restrict the way in which money in FSA accounts can be used.
- IRS prohibits using spending accounts to pay the health care insurance premiums of another plan.
- Not all expenses allowed on tax returns are eligible for FLEX reimbursement.
- Dependent Care expenses allowed for tax return purposes are listed in the Internal Revenue Service (IRS) publications 502 and 503.
- See the www.irs.gov website for more details