Understanding Your Dependent Care – How-To Guide

A Dependent Care Spending Account (DCAP) allows you to set aside pre-tax dollars to pay for day care expenses when you and your spouse are at work.

Keep these things in mind:

  • There is a $5,000 annual maximum per household. If you are married and filing your taxes separately, the maximum is $2,500 for each parent. The maximum is set by the employer and can be less than this amount. Please consult your Summary Plan Description for the maximum applicable to your Plan.
  • Record expenses for dependent children under age 13 who you claim on your taxes, or a disabled spouse or dependents of any age.
  • To qualify, you and your spouse must be employed, looking for work, or your spouse must be a full-time student.
  • Be conservative. If you don’t use the money in your account within the plan year, you lose it. Some exceptions may apply for plans that offer a grace period. Please consult your Summary Plan Description.
  • Once the plan year has started, you cannot change your election unless there is an IRS-approved status change event.
  • Ineligible expenses:

  • Costs already claimed as a dependent care tax credit on your income tax return
  • Nursing home, respite care or other residential care centers
  • Services provided by one of your dependents
  • Nighttime babysitting expenses that are not work related
  • Expenses while absent for work for more than two weeks at a time
  • Costs paid to your own dependents, under age 19, who are caring for your own dependents
  • Expenses paid for schooling, for kindergarten, or higher