What is a Dependent Care FSA?
A Dependent Care Flexible Spending Account (Dependent Care FSA) is a pre-tax benefit account used to pay for dependent care services, such as preschool, summer day camp, before or after school programs, and child or elder daycare. Contributing to a Dependent Care FSA is a smart, simple way to save money while taking care of your loved ones so that you can continue to work.
Save on Taxes, Increase take-home pay
Let’s say you enroll and contribute the $5,000 per year into a Dependent Care FSA (which is the maximum allowed by the IRS) and pay the average American tax rate of 30 percent, by putting that money aside before paying taxes on it rather than allowing the funds to be taxed, you’d save nearly $1,500 for the year.
Dependent Care Flexible Spending Account Eligibility
Funds can be used to pay for childcare for children under age 13 when they’re claimed as qualifying dependents. But the savings potential isn’t limited to just childcare. They can also cover care for a disabled spouse or dependent of any age.
To be eligible for the Dependent Care FSA offered through your employer, you and your spouse (if applicable) must be employed and file taxes jointly, or your spouse must be a full-time student or looking for work. The limit is $2,500 per person per year for married couples who file taxes separately.
Recurring Claims: If you’re paying for daycare expenses with your account and enroll in this program, you may only need to submit one reimbursement form per year for each daycare provider used.
Mobile or Online Reimbursement: You can easily upload documentation to a claim by logging into the ISG Admin mobile app, taking a photo of your documentation with your phone’s camera and uploading it. You can also use your app or online portal to upload your Reimbursement Request Form. No additional documentation is required if the form is signed by the dependent care provider.
THE ISG DIFFERENCE
Unfortunately, the IRS requires reimbursement of Dependent Care expenses, which means you pay twice! Once when the money is taken from your paycheck (which is held by your employer or TPA), and a second time when you actually pay the provider (then you turn in a receipt to get reimbursed with the money that was taken from your paycheck). Confused? ISG offers the simplest and most convenient way to pay for Dependent Care using our ISG Dependent Care account. No more reimbursement! No more caps on plan contributions. Pay only once a year! Click here to learn more.
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