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Dependent Daycare FSA

[Deleted User][Deleted User] member
in 2nd Trimester
I am thinking of enrolling in my company's dependent daycare FSA. Does anyone here have experience with one? At this point I'm not even sure what to contribute, being a FTM and not having looked into daycare costs yet. I've never had any kind of flex account so I am just wondering if you have found this type of thing to be worthwhile or not, and why. TIA!
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Re: Dependent Daycare FSA

  • yellowtulips80yellowtulips80 member

    I have a daycare FSA.  I contribute the maximum into it possible which for me is three grand.  You would be surprised how much that tax free benefit helps.  It depends on what company is managing it.  The one that does mine does a great job and cuts my reimbursement checks within a week.  It was scary to enroll at first because I didn't exactly know what I was doing.  But once you get the hang of it, it is easy to deal with.  If there are other moms where you work ask them if they use the benefit and how it works out for them.  If you know you will be putting LO into childcare I would call around and get some prices  just so you have a ballpark figure.  In my area, the max FSA still doesn't cover all of my childcare cost.  It's only about 1/3 of what I actually pay.  But that little bit of savings is worth it.  And no, it doesn't do anything crazy to your taxes when you file those at the end of the year. 

    Around this time of the year I hold off on claiming it for a few months and use the reimbursements to Christmas shop. (Mine doesn't give a debit card, they just cut checks.)  A lot of people I know do the same thing or wait until summer and claim it all at once for vacation cash.

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  • kjg5445kjg5445 member
    i dont care for mine, but i dont contribute a lot. you have to have the child care fill out a form to get reimbursed and it can be a PITA. id rather have the money on my check and use it that way its easier to me. but i dont have a lot of extra money to put in the account anyway. i can see doing what PP said if i had the extra money to contribute.

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  • Mind_the_GapMind_the_Gap

    Depending on your income levels and tax bracket, the tax savings by participating in a dependent care FSA can be substantial. 

    "Generally those employees with a combined income over $30,000 or who spend more than $3,000 on care for only one qualifying child will save more through the Dependent Care FSA. Please contact your tax advisor if you have questions about which is best for you."

    The maximum contribution per married couple filing jointly is annually $5,000 limited by the IRS, your employer sponsored plan may set a lower limit if they wish.

    You can only be reimbursed for daycare expenses with money that you have already funded into your account.  This is different from a healthcare FSA that allows you access to your total annual contribution on January 1.  

    We use ours like a savings account.  The money is withheld from my DH's paycheck each pay and then at the end of the year, I submit an invoice for reimbursement of the $5,000.  You could also just submit for a reimbursement each pay cycle and get reimbursed your contribution for that pay.

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  • greengirl0909greengirl0909 member
    DH just switched jobs, but prior to that switch we participated in an FSA for day care.  We knew what we'd be spending each week and then actually figured a little under, just in case something went awary.  GL
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  • LillyGrrlLillyGrrl member

    My husband has been contributing to dependent care FSA since our DD was born.  We found a daycare we can afford without the FSA so I use this as our Christmas fund money.  We take the full $5k reimbursement at the end of the year. It actually works out better to do the tax-free savings and using it for Christmas than funding a Christmas club which would earn interest that I'd have to claim on my taxes.  It's a win-win IMHO.

     

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  • makinithappenmakinithappen member
    I've used one for the last 3 years, and have had no problems.  I pay for daycare monthly then submit a claim online at the end of each month.  The claim prints out, the daycare signs, and I fax it back.  They direct deposit the money within a couple of days, and daycare is completely tax free now.  I'm waiting to increase the amount until the baby is born and it is opened back up for the qualifying event.
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  • [Deleted User][Deleted User] member

    Thanks a lot for the replies ladies, I really appreciate it.

    I'm assuming you're able to claim the full reimbursement around Christmas because you spent at least that much on daycare? As I understand it, it's a "use it or lose it" account, right? I can only get the money reimbursed for daycare costs, it's not really a straight savings account?

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  • makinithappenmakinithappen member
    imagerocknrollfriend:

    Thanks a lot for the replies ladies, I really appreciate it.

    I'm assuming you're able to claim the full reimbursement around Christmas because you spent at least that much on daycare? As I understand it, it's a "use it or lose it" account, right? I can only get the money reimbursed for daycare costs, it's not really a straight savings account?

    Correct.  It is based on calender year so they are saving up everything they paid in daycare throughout the year and claiming it at once.

    It covers daycare, day camps, etc.

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  • Mind_the_GapMind_the_Gap
    Yep, use it or lose it.  Unfortunately we hit over $5k in daycare expenses in 6 months, so we don't have any problem using what we defer.
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  • [Deleted User][Deleted User] member

    Cool, thanks so much ladies!

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