DCFSA Frequently Asked Questions

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What is a Dependent Care Flexible Spending Account (DCFSA)?

A Dependent Care Flexible Spending Account (DCFSA) is a tax­‐free account you can establish with your employer. The contributions you make to your DCFSA are not subject to Federal Income Taxes, Social Security Taxes, or State Income Taxes (* in most States). You then use your DCFSA throughout the plan year to pay for your work­‐related dependent day care expenses.

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Who is an eligible dependent?

For DCFSA purposes, a qualifying dependent is your tax dependent:

  • who is under age 13, or
  • who is any age (including, but not limited to, your parents and parents‐in­‐laws), or your spouse or child who is mentally or physically incapable of self‐care.

To claim dependent care expenses, you must meet the following requirements:

  • You must incur the expenses for you (or, if married, for you and your spouse) to work, or for your spouse to look for work (as long as your spouse finds a job and has earned income during the year), or for your spouse to attend school full­‐time, or your spouse is physically or mentally incapable of self-­care.
  • The payments for care cannot be paid to your spouse or someone you can claim as your dependent on your Federal Income Tax Return or to your child who is under age 19. Nor can you make payments to the parent of your dependent child.
  • Your filing status must be either single, qualifying widow(er) with a dependent child, married filing jointly, or married filing separately.
  • The care must be provided for one or more qualifying persons whom you claim as a dependent on your Federal Income Tax Return.
  • You (and, if married, your spouse) must maintain a home that you live in for more than half of the year with your qualifying child or dependent.

Your child must be under age 13 when care is provided and you must be able to claim the child as an exemption on your tax return. (For an exception to this rule, see “Child of Divorced or Separated Parents” in IRS Publication 503, Child and Dependent Care Expenses”.) The noncustodial parent cannot treat the child as a qualifying dependent for the DCFSA even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. A dependent of any age (such as a parent) who is physically or mentally incapable of self-­care also qualifies if he or she can be claimed as an exemption on your tax return (or could have been claimed, except for the fact that he or she has $3,050 or more of gross income).

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Do I and my spouse (if married) have to earn income during the year to use the DCFSA?

The DCFSA allows you to be reimbursed on a tax­‐free basis for childcare or dependent care expenses to qualified dependents that are necessary to allow you and your spouse to work, look for work, or attend school full‐time as described above. You (and your spouse if you are married) must have earned income during the year. Under Internal Revenue Code Sections 129(a)(2)(A) and 129(b)(1), the maximum amount that can be contributed to a DCFSA is limited to the lesser of:

  • $5,000 for single individuals or married couples filing joint returns;
  • $2,500 for married couples filing separate returns;
  • your earned income (if less that $5,000/$2,500);
  • your spouse’s earned income (if less that $5,000/$2,500).
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Can my spouse and I both have DCFSA’s through our employers?

Yes, however, by law, the maximum amount you and your spouse may contribute together is $5,000 per household ($2,500 if married filing separately). So the combined contributions cannot exceed $5,000 total. Additionally, the same expenses cannot be claimed on both your and your spouse’s DCFSA.

If you incur more than $5,000 a year in childcare or dependent care expenses, you may be able to take advantage of the Federal Dependent Care Tax Credit. The IRS allows an income tax credit of up to $6,000 of dependent care expenses if you have two or more dependents in childcare or dependent care (up to $3,000 for one dependent). The amount of the credit is based on your household adjusted gross income and applies only to your Federal income taxes. So, while the maximum allowed under a DCFSA is $5,000 per household, you may be able to apply the $1,000 incremental difference between the DCFSA maximum and the Federal Child and Dependent Care Tax Credit if you have two or more dependents in dependent care or child care and your expenses exceed $5,000. For more information about the Federal Tax Credit, please see IRS Form 2441.

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Which is better, the DCFSA or the Federal Dependent Care Tax Credit?

If you have two or more dependents and your household adjusted gross income is less than $43,000, the Federal Tax Credit may be more beneficial to you. However, if your household adjusted gross income is greater than $43,000, it is likely the DCFSA will provide greater savings. If the Federal Tax Credit is the better option, you will need to file Form 2441, “Child and Dependent Care Expenses” when you file your Federal Income Tax Return. If the DCFSA is the better option, the amount of your DCFSA contributions for the Plan Year will appear in Box 10 on your W-­2 Form. To help you determine the best option (the DCFSA, the Federal Tax Credit, or a combination of both), complete the Dependent Care Worksheet.

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What expenses are eligible for reimbursement from my DCFSA?

You can use your DCFSA to pay eligible expenses for the care of your dependent children under age 13, or for a person of any age whom you claim as a dependent on your Federal Income Tax Return and who is mentally or physically incapable of self-­care.

Examples of eligible expenses include:

  • Childcare at a day camp, nursery school, or a private sitter;
  • Childcare at a childcare center or dependent are at a dependent care center if the center complies will all state and local licensing regulations, if any, and the center provides care for more than six person (other than persons who live there) and receives a fee, payment, or grant for providing childcare or dependent care services, even if the center is not run for profit;
  • Before and after-­school care (other than tuition expenses);
  • Summer or holiday day camps, including registration fees;
  • Activities in lieu of day care when the fees associated with the activity are incidental to, or cannot be separated from, the cost of the childcare or dependent care (such as swimming lessons, arts and crafts, music lessons, etc.);
  • Placement fees for a dependent care provider, such as an au pair;
  • Expenses for a housekeeper whose duties include caring for an eligible dependent;
  • Care for an incapacitated adult who lives with you at least eight hours a day and whom you claim as a dependent on your Federal Income Tax Return.
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What expenses are NOT eligible for reimbursement by a DCFSA?

Examples of ineligible DCFSA expenses include:

  • Education or tuition fees;
  • Expenses for children age 13 and older (unless the child is mentally or physically incapable of self-­care);
  • Late payment fees;
  • Overnight camps;
  • Payment for services not yet provided (*payment in advance);
  • Field trips, clothing and food;
  • Transportation to and from the childcare or dependent care provider;
  • Expenses for childcare or dependent care that is not work­‐related.

*Childcare and dependent care expenses cannot be reimbursed until the services are actually provided. In other words, pre-­paid or expenses paid in advance, are not eligible for reimbursement under your DCFSA until the services have actually been rendered.

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When is my DCFSA election available to me?

Unlike the Health Care Flexible Spending Account (HCFSA), the current balance in your DCFSA on the day your claim is processed is the maximum you can be reimbursed at that time. If your childcare or dependent care expenses exceed what you have in your account, EBS/Atlanta will process your claim and reimburse you the available amount in your DCFSA on the day of processing. The remaining claim amount that exceeds the balance in your DCFSA at the time your claim is processed will be pended until your next contribution (payroll deduction) is received. The remaining amount will automatically be reimbursed to you on the next scheduled reimbursement cycle, assuming your next deduction will be sufficient to cover the balance of our original claim amount. You will not need to file a new claim form for the remaining claim amount.

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Can I use my DCFSA to pay for a babysitter in my home rather than using a childcare center?

Yes, as long as the services are necessary in order for you and your spouse, if married, to work, look for work, or if your spouse attends school full‐time. See Do I and my spouse (if married) have to earn income during the year to use the DCFSA?

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My child goes to a day camp during the summer. Is that qualified childcare?

Yes, as long as your child is under age 13 and attendance at the camp is necessary for you and your spouse, if married, to work, look for work, or for your spouse to attend school full­‐time.

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My child is under age 13 and goes to an overnight camp during the summer. Is that an eligible expense?

No. Overnight camps or day camps that include an overnight stay are not eligible for reimbursement. The IRS does not recognize overnight camps as a work‐related expense. See IRS Publication 503.

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My child attends private school. Are tuition payments eligible under my DCFSA?

No. School tuition (including summer school and tutoring programs) is not considered childcare, however, before and after-­school care is a qualified expense. Your provider will be required to itemize the costs between tuition and before/after­‐school care.

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My child attends pre-­school. Is that an eligible expense?

Yes. Expenses for a child in nursery school, pre-­school, or similar programs for children below the level of kindergarten are eligible for reimbursement. Expenses to attend kindergarten or a higher grade are not eligible under a DCFSA.

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My child will turn 13 in the middle of the month. Can I submit the childcare expenses for the entire month?

No. You can only submit expenses for the portion of the month during which you child was under age 13.

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What information do I need from my childcare or dependent care provider?

Your childcare or dependent care provider(s) must provide you with their Social Security Number (SSN) or Tax Identification Number (TIN). If your provider does not have a SSN or TIN (or refuses to provide it to you), you must submit a letter indicating that you attempted to obtain the SSN or TIN and were unable to do so. The letter must show the name and address of the provider and must be signed by you.

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I am considering having an au pair take care of my child. There is a $3,000 up-­front fee and I will pay $200 a week to the au pair. Does any of this qualify as a DCFSA expense?

The upfront fee qualifies as an eligible childcare expense if you must pay it in order to obtain the care. However, you must apply the upfront expense proportionately over the duration of the agreement to employ the au pair. For example, if you have an annual agreement with the au pair who is paid weekly, 1/52nd of the placement fee would be reimbursable each week. The $200 that you pay the au pair each week as well as other work related expenses may qualify as a childcare expense depending on your tax situation. See IRS Publication 503, “Child and Dependent Care Expenses” for more information on au pairs.

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How long do I have to wait to be reimbursed?

EBS/Atlanta processes claims the same day they are received with payment made according to the reimbursement schedule established by your employer. If you have not received a copy of your employer’s Reimbursement Schedule, please contact a member of your EBS/Atlanta Customer Service Team at (800) 647-­3709 or by email to email hidden; JavaScript is required.

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How do I file a claim for reimbursement?

When you incur an eligible childcare or dependent care expense, you will need to complete a Claim For Reimbursement Form along with a bill or receipt. You will be reimbursed an amount equal to your DCFSA balance on the day your claim is processed. This means that if you submit a claim for expenses that exceed your account balance, you will be reimbursed for the amount you actually have in your DCFSA on the day your claim is processed. You will automatically be reimbursed the balance of your claim as additional contributions (payroll deductions) are made.

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Must I pay my childcare or dependent care provider first before I file a claim for reimbursement?

No. You must only incur the expense before you file a claim for reimbursement. “Incur” means that the service must actually be provided during the Plan Year, regardless of when you are billed or actually pay your provider.

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Can I make a mid-­year change to my DCFSA election?

Generally no. Once you have decided to establish your DCFSA, you will not be able to change your election during the Plan Year, however, there are exceptions to this rule. For example, if you have a qualified change in status, such as the birth or adoption of another child, a divorce, legal separation or death. You may also be able to change your election if your childcare or dependent care provider arrangement changes (you change providers or remove your child from daycare, or the cost of your childcare or dependent care changes during the Plan Year. You may also change your election if your child reaches the age of 13 during the Plan Year. To request a mid-­year election change, you will need to complete a Mid-­Year Change Request Form and submit it to EBS/Atlanta within 30-­days of the status change or change in provider. If your change in status is approved and allows you to decrease or stop your DCFSA contributions for the remainder of the Plan Year, it will be at the lower payroll deduction rate. However, if you stop your DCFSA payroll deduction entirely, any contributions you have already made to your DCFSA must be used for reimbursements of childcare or dependent care expenses incurred prior to the date you stopped contributing. Any remaining DCFSA balance cannot be refunded to you.

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What happens to my DCFSA if I take a paid or unpaid leave of absence?

Because childcare and dependent care expenses must be work-­related, you may not be reimbursed for any expenses incurred during any period of paid or unpaid leave of absence taken by you or your spouse (if married). We recommend that you complete a Mid-­Year Change Request Form prior to the date you or your spouse plan to take a leave of absence. You may request that your deductions continue for the remainder of the Plan Year when you or your spouse returns to work.

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What happens to my DCFSA if I, or my spouse, terminates employment or retires?

If your or your spouse’s employment terminates or if you or your spouse retires during the Plan Year, no additional contributions may be made to your DCFSA. You may however, continue to file claims for reimbursement of any remaining account balance for eligible childcare or dependent care expenses that you incurred prior to the date of termination or retirement. EBS/Atlanta recommends that if you know you or your spouse will be terminating employment or retiring during the Plan Year, you consider not electing to contribute to a DCFSA. Rather, consider using the Federal Tax Credit for the period that you had eligible childcare or dependent care expenses (unless your spouse will immediately be gainfully employed with another employer).