Dependent Care Flexible Spending Accounts
A Dependent Care Flexible Spending Account, or FSA, is a pre-tax benefit account used to pay for dependent care services while employees are at work. Employees can use the account to help pay for child care, preschool, summer camps, and before and after-school programs that are not sponsored by their employer. Money contributed to a Dependent Care FSA is not subject to payroll taxes, so employees who contribute pay less in taxes and take home more of their paycheck.
Employers can contribute to their employees’ Dependent Care FSAs, but there are maximum total contribution limits. Typically, those limits are $5,000 for single taxpayers and married couples filing jointly or $2,500 for married people filing separately.
Dependent Care Expense Accounts (DCEAs) are similar to Dependent Care FSAs;