What expenses qualify for a dependent care FSA (Flexible Spending Account)?
A dependent care Flexible Spending Account (FSA) is a pre-tax benefit that helps individuals save money on eligible expenses related to the care of dependents, such as children or disabled adults. It allows you to set aside a portion of your salary before taxes to cover these expenses, which helps to reduce your overall taxable income. However, it is important to understand which expenses qualify for reimbursement under a dependent care FSA. Here is a comprehensive guide to help you navigate through the expenses that qualify for this valuable benefit.
One important criterion for expenses to be eligible for reimbursement under a dependent care FSA is that they must be incurred to enable you and your spouse, if married, to work, look for work, or attend school full-time. The expense should be directly related to the care of your child, disabled spouse, or another dependent incapable of self-care. The care can be provided either in your home or outside your home through a licensed facility, such as a daycare center or preschool. Some common eligible expenses include:
1. Daycare expenses: The cost of daycare centers, preschools, and before or after-school care programs qualifies for reimbursement under a dependent care FSA.
2. Babysitting fees: If you hire a babysitter to care for your child while you work or attend school, those expenses are eligible for reimbursement.
3. Summer camp: The cost of sending your child to a day camp during the summer months can be reimbursed through a dependent care FSA, as long as the primary purpose is the care of the child.
4. Home care: If you employ a nanny or caretaker to provide care for your child or dependent in your own home, the expenses incurred can be reimbursed.
5. Disabled adult care: Expenses related to the care of a disabled adult, such as a special needs child or an elderly family member, may also be eligible for reimbursement.
6. Nursery school: Tuition fees paid to a nursery school for children below kindergarten age can be considered eligible expenses.
7. After-school programs: Costs associated with programs that provide care for children after school hours, such as enrichment or tutoring programs, can be reimbursed.
8. Transportation expenses: Transportation costs incurred while taking your child to and from eligible care facilities, such as daycare centers or after-school programs, can be considered eligible.
9. Registration fees: Payments made to reserve a spot or secure a place in a daycare center, preschool, or other eligible care programs can be reimbursed.
10. Overnight camp: While expenses for overnight camps are generally not eligible, there are exceptions when the camp is primarily a care facility designed to provide care for the child rather than just for recreational purposes.
11. Kindergarten expenses: If your child attends a kindergarten program that primarily serves as a childcare facility, the expenses associated with it may qualify for reimbursement.
12. Before-school care: If you utilize care services for your child before school hours, the expenses incurred for such care may be reimbursed.
FAQs:
Q1. Can I use my dependent care FSA funds to pay for a nanny or au pair?
A1. Yes, expenses incurred for hiring a nanny or au pair to provide care for your child in your own home are generally eligible for reimbursement.
Q2. Are expenses for overnight boarding schools eligible for reimbursement?
A2. No, expenses for boarding schools are typically not eligible unless the school primarily serves as a care facility for the child.
Q3. Can I use funds from my dependent care FSA to pay for extracurricular activities?
A3. No, expenses incurred for extracurricular activities, such as sports or music classes, are generally not eligible for reimbursement.
Q4. Are expenses for a summer day camp eligible?
A4. Yes, as long as the primary purpose of the day camp is to provide care for the child, the expenses are eligible for reimbursement.
Q5. Can I use dependent care FSA funds to pay for a babysitter while I am on vacation?
A5. No, expenses for babysitters or care providers while on vacation are typically not eligible for reimbursement.
Q6. Are tutoring expenses eligible for reimbursement?
A6. Yes, tutoring expenses incurred as part of an eligible care program, such as an after-school program, may be eligible for reimbursement.
Q7. Can I use my dependent care FSA funds to pay for before-school care?
A7. Yes, expenses incurred for qualifying care services received before school hours may be eligible for reimbursement.
Q8. Can I claim expenses for my children’s transportation to and from school?
A8. No, transportation expenses for regular school attendance alone are generally not eligible for reimbursement.
Q9. Are expenses for a private nurse eligible for reimbursement?
A9. Yes, if the private nurse is hired to care for a disabled adult, such as a special needs child or an elderly family member, the expenses may be eligible for reimbursement.
Q10. Can expenses for a part-time nanny be reimbursed?
A10. Yes, as long as the nanny is providing care for your child while you work or attend school, their expenses can be reimbursed.
Q11. Is the cost of a sleepover at a friend’s house eligible for reimbursement?
A11. No, expenses related to sleepovers or occasional care arrangements are typically not eligible for reimbursement.
Q12. Can I use my dependent care FSA to pay for expenses incurred during a COVID-19 lockdown?
A12. Yes, expenses incurred for eligible care services during a COVID-19 lockdown, such as remote learning support, may be eligible for reimbursement.