No matter which medical plan option you choose (or even if you waive medical coverage), you can contribute to a Dependent Care FSA to pay for dependent daycare expenses tax-free.
Dependent Care FSA
The Dependent Care FSA lets you set aside pre-tax money to pay for eligible dependent daycare expenses. You’re eligible to enroll in the Dependent Care FSA, regardless of your medical plan choice, and even if you aren’t enrolled in any other ITW benefits. FSA contributions are deducted from your paycheck before you pay federal, state, city or Medicare taxes. Because your taxes are calculated on a lower income, you will pay less tax.
Choose how much to contribute when you enroll. Choose carefully because you can’t change your contribution until the next Open Enrollment, and you lose any money left in your account at the end of the year.
You can save up to $5,000 (or $2,500 if you are married and file a separate tax return). The money is then deducted from your paycheck throughout the year in equal amounts before taxes are calculated.
Use your Dependent Care FSA to pay for daycare expenses necessary for you (and your spouse, if married) to work or go to school full time, such as:
- Licensed daycare centers
- Family or adult daycare facilities
- Babysitters (cannot be a dependent you claim on your income taxes or your children under age 19)
- Day camps (but not overnight camps)
Expenses may be for your children under age 13 and for your mentally or physically disabled dependents of any age.
Simply pay for the service and file a claim for reimbursement. You may only be reimbursed up to the amount currently in your account at any time.
You can incur expenses through December 31 each year. (Expenses are eligible only if they were incurred while you were enrolled in the FSA.) You must submit expenses by March 31 of the following year. Any unused funds will be forfeited.