Learn more about DCFSAs, including how and when you can enroll, eligible expenses, estimated savings, and how to use your DCFSA dollars.
A Dependent Care FSA (DCFSA) allows families to use up to $5,000 in pre-tax dollars toward qualified dependent care expenses like daycare and preschool, which means more money in parents’ pockets. These contributions are deducted from your paycheck and are not subject to payroll taxes. This is where the savings comes in.
Why Enroll?
More money in your pocket by paying less taxes
FAQs
What exactly is a DCFSA and am I eligible?
To start, let’s break down the phrase Dependent Care FSA.
- Dependents may be
- Children under age 13
- Spouse or dependent unable to care for themselves
- Care must enable parents to work
- Each parent must be working, looking for work or enrolled in school full-time
- If a parent stays at home with their child(ren) and does not meet the eligibility requirements outlined above, child care expenses such as enrichment classes, day camps or babysitting are not eligible
- Flexible Spending Account (FSA)
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A Flexible Spending Account is a special account you put money into that you use to pay for certain out-of-pocket care costs, in this case expenses related to child care.
You don’t pay taxes on this money. This means you’ll save an amount equal to the taxes you would have paid on the money you set aside.
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How and when can I enroll?
- Enroll through your benefits administrator (if you’re not sure who this is, just ask HR) during Open Enrollment or when you have a qualifying event (see below for list)
- You MUST re-enroll every year, even if nothing has changed
- To learn more about how and when you can enroll, log into your benefits accounts or reach out to your HR director
When can I make changes to my DCFSA?
When you have a qualifying life event, you typically have 30 days to report your change in status to your benefits department. Check with HR for plan details.
Qualifying life events include any of the following:
- New birth or adoption
- Change in employment status of you or your spouse
- Change in legal marriage status
- Changes in custody
- Need for care changes due to change of work hours or job change
- Cost of care changes
- Your income has changed
- Change in your dependent(s) eligibility
- Death of a dependent
What can I use my DCSFA dollars on?
Eligible child care expenses include:
- Daycare providers (home based and centers), including registration fees
- Preschools — private school tuition for kindergarten level and above are ineligible because education is not considered a child care expense; however, before and after-school care is eligible
- Before and after-school care — You can use your FSA to pay for late pick-up fees due to work. You cannot use funds to pay late payment fees
- Au Pair, nannies, babysitters
- Dependent adult care
- Day camps and summer or holiday camps are eligible; however, fees for overnight camps are not
How much should I contribute to my DCFSA?
- You can elect $5,000 of your gross pay (pre-tax dollars) towards dependent care
- If you are single or file as head of household, you can contribute up to $5,000 to your DCFSA
- If you’re married and file jointly, $5,000 is still your limit
- If you file separately, you can each contribute up to $2,500
- Reminder, these dollars are not taxed. The full amount you contribute is what you get to spend
How is money deducted from my wages?
- Funds are automatically deducted from your paycheck. Since pay schedules vary, check your account plan for details on scheduled deductions
- You receive your paycheck minus the funds taken out for your FSA
What happens to the funds in my DCFSA at the end of the year?
- This is important. Dependent Care FSA funds do not roll over to the following year
- You will lose your DCFSA funds if you do not use them
- Some employers offer a grace period at the end of the year to give you time to submit all your receipts. Speak with your benefits administrator or HR to find out what your employer is doing
How do I use my DCFSA funds?
Each FSA administrator has their own portal and process for reimbursement, so it’s important to refer to your account plans for details. Things to look for include:
- Debit card — Some plans provide a debit card that you can use to pay your provider
- Reimbursement — Many plans allow you to pay for your dependent care out of pocket and then submit a claim for reimbursement
- In order to be reimbursed, submit copies of receipts per plan instructions
- Reimbursements may be sent to you via check or direct deposit
- You typically have until the end of the year to submit all your claims and some plans may offer a grace period
- In some instances, claims may be approved for future care
Can I use my DCFSA dollars for a daycare or preschool that is not yet a Kinside Partner?
Yes, you can use your DCFSA dollars towards any child care provider you find on Kinside regardless of their partner status. Learn more about Kinside partners here.
How is a DCFSA different from the Child and Dependent Care Tax Credit?
- DCFSA is a tax deduction with up to $5,000 not subject to payroll taxes
- Savings are dependent upon your income and tax brackets. The higher your income, the higher the savings
- DCFSA allows up to $5,000 in eligible expenses for one dependent, while the tax credit is limited to $3,000 for one dependent
- Child and Dependent Care Tax Credit: a tax credit for eligible dependent care expenses
- Maximum claims of $3,000 for one dependent or $6,000 for two or more.
- Credit is dependent upon your income: The higher your income, the lower the credit.
In summary, tax brackets higher than 35% may benefit more with the DCFSA, while families with annual incomes of $30,000 or less would likely benefit more from the Child and Dependent Care Tax than a DCFSA.
Is a DCFSA for healthcare for my children?
You cannot use your DCFSA for your children’s healthcare expenses.
Still have questions? Reach out to Kinside Concierge for more assistance. Email us at concierge@kinside.com or use the chat window on the bottom right of the app to contact a Concierge from the hours of 8am-5pm PST.