A dependent care flexible spending account (FSA) is a personal expense account that allows you to set aside a portion of your salary pretax. You can use that money to pay for certain dependent care costs such as daycare, preschool and after-school programs, and eldercare, tax-free. Depending on your tax bracket, a dependent care FSA can help you save as much as 28 to 40 percent on most of these costs. See your tax advisor with questions.
HOW THE DEPENDENT CARE FSA WORKS
1. Estimate your dependent care costs next year. (Plan wisely Depending on the plan your employer sets up, any unused money will be forfeited at the end of the plan year or grace period.)
2. Select how much to withhold from your pay at enrollment.
3. The amount you select is withheld pretax from your pay in equal portions throughout the year and put into your FSA.
4. Once it’s in your FSA, the money is ready to use for dependent care costs. Simply submit your receipts and get reimbursed up to the available balance in your account.
2026 DEPENDENT CARE FSA LIMITS (2019 LIMITS NOT YET RELEASED)
Plan Year Minimum: $25
Plan Year Maximum: $7,500