Many people understand the qualifying expenses for a Health Care Spending Account (HCSA), but they aren’t so sure about what qualifies as an eligible Dependent Care Spending Account (DCSA) expense.
First of all, DCSA expenses must be for qualifying IRS dependents, and these expenses must be work-related. Work-related expenses are those incurred because you are single and working, or if you are married, because your spouse is also working, is going to school full-time, or is mentally or physically handicapped and incurs eligible expenses.
If you have IRS tax dependent children ages 12 or younger, their care qualifies as an eligible expense. Also, if you have IRS tax dependent elderly parents, children 13 or older or a spouse who are physically or mentally disabled and unable to care for themselves, their care also qualifies. Covered care includes the cost of care provided in or out of your home for a qualifying dependent. If the qualifying dependent is a spouse or parent, that individual must spend at least 8 hours each day living in your home.
Specifically, eligible expenses include baby sitters inside or outside the home while you work, preschool, day care centers, licensed nursery schools, day camps for dependents 12 and younger, au pairs or nannies, and sick child facilities. Care providers can include relatives as long as they are not tax dependents. Elder care providers and adult day care facilities also are covered.
Ineligible expenses include care provided by another tax dependent or child under 19, transportation to and from a care provider, schooling for children in kindergarten or higher, overnight stay or overnight.
To learn more about DCSAs or Flexible Spending Account open enrollment, visit the FSA Open Enrollment website.
Other Useful Links: