Flexible Spending Account (FSA) for Dependent Care

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dependent-care-flexible-spending-account-fsaA dependent care flexible spending Account (FSA) allows you to save money pretax to pay for dependent care in the process also lowering your taxable income.

You direct part of your before-tax pay into a dependent care spending account to help pay work-related dependent care costs throughout the year. Eligible dependent care expenses are expenses that allow and your spouse, if married, to be employed.

Dependents can include someone under the age of 13 who is a dependent of yours, an elderly parent who is incapable of self care physically or mentally who lives with you or a spouse who is incapable of self care for the same reasons and lives with you.

The amount of money you can put into a dependent care account is limited by the IRS . If you are married and are filing a joint return the limit is $5,000 per year. If you are a single parent the maximum amount you can put into an FSA is also $5,000 per year. If you are married and filing separately the annual maximum amount is $2,500.

Be sure to estimate the amount of dependent FSA dollars you plan you spend. If you don’t use the money you will lose it, the money in the account cannot be carried over to the following year.

 
Author: Brian McKay
June 28th, 2009

MBR In the Press





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