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How Do I Use a Dependent Care FSA?

It's important to note that a DCFSA cannot be used for health care expenses.

Kids are expensive, no matter what stage of life they are in. It starts when they’re in diapers, leaving you perplexed at how Junior managed to blow through that 96-pack you bought just the other day. Then comes daycare, which can easily cost as much as a monthly car payment (but let’s not dwell on that). One way you can help reduce the expense of toddlerhood is through a Dependent Care Flexible Spending Account (DCFSA), sometimes referred to as a Dependent Care Reimbursement Account. 

How does a DCFSA work? 

You may be familiar with a health care Flexible Spending Account (FSA), and a DCFSA works much the same way. A DCFSA lets you put aside up to $5,000 annually from your paycheck on a pre-tax basis to cover dependent daycare expenses while you work or attend school. A DCFSA cannot be used to pay for medical expenses for your dependents. That’s what a health care FSA is for. 

The money you contribute to a DCFSA is not subject to payroll taxes, so you end up paying less in taxes and taking home more of your paycheck. Consider this scenario as an example: Daycare is $300 per month, summer camp is $500 a month, and an after-school program is $50 per month, for a total of $4,650 a year. So, a married couple making $100,000 would be taxed on $95,350. Using their 22% tax bracket, they’d save more than $1,000 in federal taxes. That’s $1,000 you could spend on … more diapers! 

Who is eligible? 

First of all, both parents must be working or attending school full time to be eligible to take advantage of a DCFSA.  

A “qualifying dependent” may be: 

  • A child (deemed an IRS-qualified dependent) younger than 13 years old, including stepchildren and eligible foster children
  • A mentally or physically disabled spouse
  • An older parent in elder care

Some relatives are not eligible to be a care provider: 

  • Your children under age 19
  • Your spouse
  • The parent of your child, if not your spouse
  • Your tax dependents


Annual limits are: 

  • $5,000 for single tax filers, single head of household, or for those who are married filing jointly
  • $2,500 for those who are married filing separately

That means a married couple can each contribute $2,500 to their own DCFSA, for a total of $5,000.  

Contributions are deducted equally each pay period. You cannot be reimbursed in anticipation of contributions. In other words, you may only use money that has actually been contributed. You must make a new election each year to participate. 

Eligible expenses 

Care can be either in your home (babysitting) or outside your home, like at a childcare center. 

Qualified: Preschool, daycare, before- and after-school programs (including pick-up fees), summer day camp, babysitting or nanny services 

Not qualified: School tuition, overnight camps, late payment fees, field trips, transportation to and from a care provider 

For a list of eligible expenses, see IRS Publication 503. 

Here’s a calculator to determine your savings if you were to enroll in a DCFSA: Dependent Care FSA Calculator 


Jason Levan

Jason Levan joined Kuzneski Insurance Group in 2021 as Director of Communications and Content after his first career as a newspaper reporter and editor. In Act II, he oversees the content marketing for the company, with the goal of making the insurance world easier to understand and navigate for our clients. When he’s not at work, you can often find him “banging and clanging” in the gym, or spending time with his family.

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