Dependent Care Reimbursement Account
You can use the Dependent Care Reimbursement Account for the care of qualified dependents so that you (and your spouse if you are married) can work. Qualifying dependents include:
- Children under age 13 you claim as dependents on your tax return.
- Anyone age 13 or older who lives with you at least eight hours a day and needs supervised care, such as an elderly parent or a disabled child or spouse.
You may set aside as much as $5,000 in an account to cover eligible expenses during the year. See IRS Publication 503 for information about eligible expenses. The amount you can set aside may be different based on your tax status.
| Based on your tax status . . . | You can set aside . . . |
| If single or married filing jointly | up to $5,000 |
| If married filing jointly and your spouse's employer offers a dependent care account | Up to $5,000 in total to the two accounts |
| If married filing separate returns | Up to $2,500 |
Your contributions come out of your check in equal installments each pay period.
Dependent Care Reimbursement Account vs. Dependent Care Tax Credit
The federal government offers a dependent care tax credit for your day care expenses - and you can't get the tax benefit of both the reimbursement account and the tax credit for the same expenses.
Think about what fits your situation best - the flexible spending account or the dependent care tax credit provided by federal law. Keep in mind that you cannot take the tax credit for any amounts that are reimbursed through the Dependent Care Reimbursement Account. In some cases, the tax credit may provide more savings than an FSA.
| Dependent Care Reimbursement Account | Dependent Care Tax Credit |
| You decide in advance how much to set aside for the coming year. | You wait until filing your tax return to determine your dependent care costs and decide whether you can take advantage of the tax credit. |