Use a Dependent Care FSA to Save Money on Child Care Expenses
Published December 2009
Child care costs are on the rise, with the average family paying between $7,200 and $9,600 per year. Most families would jump at the chance to reduce their child care costs and their opportunity comes in the form of a Dependent Care Flexible Spending Account. With a Dependent Care FSA, you can get the reimbursements you need for dependent care payments quickly.
If you’re already paying these child care costs out-of-pocket, why not get a tax break on these payments? With a Dependent Care FSA, you can exclude up to $5,000 from gross income for amounts paid for dependent care assistance. This means if you’re in the 28% tax bracket and you elected the full $5,000 for Dependent Care FSA benefits, it would result in a tax savings of $1,400 plus $382.50 for FICA taxes that are also avoided.
Below is a partial list of expenses that a Dependent Care FSA can be used for*:
- Child care centers
- Family day care centers
- Preschool or nursery school
- Caregivers for disabled dependent or spouse who lives with you
* Please consult BASIC prior to election for eligibility requirements.
In addition to the benefits offered by the Dependent Care FSA, many families with two or more children are also able to claim the federal government’s Dependent Care Tax Credit (if they spend more than $5,000 per year on dependent care expenses).
If you’re interested in BASIC FSA please call 800-444-1922 X 3 or email sales@basiconline.com
If you would like to request a proposal for BASIC services, please visit this page.
