Dependent care is an important issue, and a large expense, for many American families. Millions of people rely on child care or elder care to be able to work.
If you care for a child or adult who is incapable of self-care, lives in your residence for a minimum of 8 hours per day, and whom you can claim as a dependent on your taxes, you may be eligible to enroll in a Dependent Care Flexible Spending Account (DCA).
In order to be an eligible dependent care expense, the expenses must be included on your annual taxes with the provider and the provider’s tax ID listed.
DCAs are set up through your workplace. Much like a Flexible Spending Account (FSA), you can choose to enroll in a DCA during your employer’s open enrollment period. When you enroll, you will choose your annual election. Each payroll period, funds from your paycheck will be placed in a pre-tax account and accrued throughout the plan year. The 2019 contribution limits for DCAs are $2500 for an individual and $5000 for a married couple.
The election amount can also be changed outside of the open enrollment period if you have a qualifying life-changing event (as defined by the IRS) such as marriage, the birth of a child, divorce, or death of a spouse. To do so, please contact your employer’s payroll or human resources department.