By participating in Dependent Care, you reduce your taxable income and increase your take home pay. Typical Dependent Care providers include in home providers/housekeepers, child care provided by a licensed provider or day care centers. Reimbursement requires either a tax identification number or social security number of provider.
The IRS has set these maximum allowable contributions for reimbursement: $5000.00 for a married couple filing jointly; $5000.00 for a single parent; $2500.00 for a married person filing separately. The child must be under 13 years old and must be a dependent under federal tax rules. Examples of typical Dependent Care providers are Child Care Centers and home care/housekeepers.
Note: Unlike medical FSA’s, dependent care FSA’s are not pre-funded; employees cannot receive reimbursement for the full amount of the annual contribution on day one. Employees can only be reimbursed up to the amount they have had deducted during that plan year.