Dependent Daycare Flexible Spending Accounts Give Yourself a Raise!
Do you have dependents that require daycare? Care at licensed daycare Before and after school care Daycare outside your home, including babysitter The above listed items are eligible for reimbursement under a dependent daycare flexible spending account, and utilizing the account may reduce taxes you pay
Are some dependent daycare services ineligible for dependent daycare reimbursement? Yes! You may not seek reimbursement for: Tuition for education (i.e. Kindergarten) Overnight Camps Transportation costs and field trips
If you have eligible expenses 1.Come up with an amount that you and your family will spend on eligible expenses for the plan year (for example, $5000) 2.Complete an application for dependent care reimbursement and make your annual election (in this case, $5000). 3.The $5000 election is divided by your number of payrolls, and an even amount comes from each paycheck. 4.Prior to the start of the plan year, you will receive a Debit Card from Nyhart. 5.During the plan year, use the Debit Card for eligible expenses until your annual election ($5000) is expired. 6.After spending the election ($5000), begin paying out of pocket as you traditionally would
Notable Facts The IRS has a $5,000 per household maximum for dependent daycare reimbursement A key difference from medical reimbursement! For dependent daycare, a deduction must actually be taken from your paycheck before you are eligible for reimbursement Keep your receipts! You may occasionally be asked to provide a copy Use it or lose it – so be sure to incur all your Dependent Daycare Flexible Spending Account money during the plan year, because you lose any money that you do not spend. 90 day grace – if you incur bills during the plan year you may claim the expenses up to 90 days after the end of the plan year You must be eligible for the district’s medical plan to participate, but you may participate in dependent daycare even if you do not take the district’s medical insurance plan
Notable Facts (continued) The plan year begins September 1 each year and lasts through August 31 the following year. A short plan year is established of March 1 – August 31, 2013 for this enrollment period A child dependent must be under age 13 to qualify for reimbursement Expenses incurred should allow you or your spouse to be gainfully employed The expenses cannot be paid to a child of yours under age 19 or to a person whom your spouse or you may claim as a dependent
How does Dependent Daycare Reimbursement save me money? Each pay period when the payroll deduction is taken from your paycheck, the deduction reduces your taxable income Federal, State, Local, and other Payroll taxes are eliminated due to your reduction in taxable income As a result, you spend money on eligible items you would have purchased anyways through your daycare provider, however, you have reduced the amount of taxes you pay
Dependent Daycare Reimbursement is right for me if: You are eligible for the Zionsville Community Schools medical insurance You have an eligible dependent that receives eligible dependent daycare Paying less taxes interests you * Remember – with dependent care reimbursement the deduction must be taken for your paycheck before you are eligible for reimbursement. You may not seek advance reimbursement.