A specific type of Flexible Spending Account that allows you to save for dependent care expenses. You must use the money to cover out-of-pocket expenses related to care of dependent children or pare... More (FSAs) allow you to set aside a portion of your paycheck without paying any taxes on the money. You must use the money to cover out-of-pocket expenses related to care of dependent children or parents that allow you to go to work. You do not pay Social Security or Federal income taxes on money put into or withdrawn from a dependent care (FSA) An account that helps fund your share of medical expenses specified by your employer. This type of account is fully funded by employers and does not allow employee contributions.. In many states, you also do not have to pay state income taxes.
There are restrictions on the types of expenses you can pay from your account. You can generally pay for child daycare (both traditional daycare and nannies), elder care, before-and-after school programs and sick childcare services, among others. If you plan to use the money for other services, you’ll want to confirm that they are acceptable. This publication from the IRS web site provides lots of details about who can qualify and the types of expenses that are acceptable.
You lose any money money you contribute to a dependent care (FSA) An account that helps fund your share of medical expenses specified by your employer. This type of account is fully funded by employers and does not allow employee contributions. if you don’t spend it in the same year. For most people, the 2018 maximum contribution was $2,500 if you were single and $5,000 if you are married. If your dependent care expenses are highly likely to exceed that limit, the tax savings make it reasonable to contribute the maximum. If your expenses are likely to be less, you’ll need to take care in selecting the amount of your contributions.