Health Benefits Unit

Flexible Spending Accounts

Dependent Care FSAs

You may set aside a minimum of $300 up to $5,000 ($2,500 if filing a separate tax return for you and your spouse) this year for day care expenses. If you pay for day care so that you can work, you are eligible to open a Dependent Care FSA. Eligible claims include expenses for day care centers, baby sitters, companions, and before and/or after school care. However, the cost of educational programs, transportation and "sleep-over" camp are not eligible dependent care expenses.

To qualify as an eligible expense for the Dependent Care FSA, day care must be provided for an eligible dependent who is:

  • A child under age 13, or

  • A child, spouse, parent, grandparent, brother or sister, or other dependent who is not able to care for him/herself because of a disability and who normally spends at least eight (8) hours each day in your home. (For more information see IRS Publication 503.)

If you are married, both you and your spouse must work in order to be eligible to set up a Dependent Care FSA. The amount set aside cannot be more than your earned income or your spouse's earned income, whichever is less. Also, you may open a Dependent Care FSA if your spouse does not work and is:

  1. currently looking for work; or

  2. a full-time student; or

  3. physically or mentally disabled.

Dependent care claims are reimbursed up to the current balance in your account; claims are not paid in advance. However, if you leave LACCD employment during 2004, claims incurred while you were enrolled can be submitted up to 90 days following your termination date subject to the filing requirements listed below.

Remember, the IRS requires that you provide a receipt that includes the name, address, and taxpayer identification number of the person or organization that is providing day care services. Also, you should be aware that your W-2 tax form will reflect any monies you have set aside in the Dependent Care FSA. The money you set aside will reduce – dollar for dollar – the maximum amount of expense you can apply toward the federal dependent care credit (child tax credit) on your income tax return. Consult your tax advisor to see which method will work best for you.