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Dependent Care Spending Account
Dependent Care expenses that DO qualify for reimbursement:
- Dependent care services (including wages and related taxes) provided in your home by a nanny,
babysitter, or housekeeper.
- Dependent care expenses incurred for services outside your home, provided they are incurred
for the care of a qualifying dependent that regularly spends at least eight hours per day in your
home.
- Dependent care provided outside your home, including qualified daycare, day camp, or other
outside dependent/child care services, such as before- and after- school programs.
- Pre-school/nursery school expenses are eligible, even if the school also furnishes lunch and
educational services.
- Expenses paid to a relative (child, parent, or grandparent of participant) are eligible.
However, the relative cannot be under age 19 or a tax dependent of the participant.
- Dependent care expenses incurred to enable the employee to find work are eligible.
- FICA and FUTA payroll taxes of the daycare provider are eligible.
- The reimbursement may not exceed the smaller of the following limits:
- The maximum allowed under the plan.
- $5,000 (if you are filing a joint tax return) and $2,500 (if separate returns are filed).
- Your taxable compensation (after all compensation reduction elections).
- If you are married, your spouse's actual or deemed earned income.
Generally, eligible childcare costs include only those for the actual care of your dependent, not costs
for education, supplies, or meals - unless those costs cannot be separated.
Dependent Care expenses that DO NOT qualify for reimbursement:
- Kindergarten fees are not eligible.
- Elementary school expenses for a child in first grade or higher are not eligible.
- Dependent care obtained for non-work related reasons.
- Expenses for overnight camp.
- Dependent care expenses incurred if your spouse does not work, unless your spouse is a
full-time student or disabled.
- Any expenses you claim for the dependent care tax credit on your federal income tax return.
- Expenses provided by another organization or provided without cost.
- Care provided in a group care center that does not meet state and local laws.
- Cost for after-school educational programs (i.e., tutoring).
- Expenses incurred before you became eligible to participate in the account.
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