Day Care Flexible Spending Account

If you have children under the age of 13, or elder or disabled dependents who you claim as a tax dependent, you may benefit from a Day Care Flexible Spending Account. With easy claims submissions or regularly scheduled payments to your provider through WageWorks, you can use your pretax dollars on:

You must reenroll if you would like a Day Care Flexible Spending Account for 2009, even if you are enrolled for 2008 — enrollment does not carry over.

Estimating How Much to Save

You may elect to contribute between $120 to $5,000 annually to a Day Care Flexible Spending Account. However, for 2009 participants, if you do not use all of your Flexible Spending Account dollars by March 15, 2010, you’ll lose any unused dollars. Use the savings calculator on WageWorks to help you determine your election. Or call WageWorks customer service at 1-877-924-3967.

Grace Period Available for Day Care Flexible Spending Account

If you enroll, you will have an additional two and a half months (until March 15, 2010) to incur eligible expenses that can be applied to your 2009 Day Care Flexible Spending Account election.

Extended Deadline to Submit Claims

You’ll now have until April 30, 2010 to submit claims for your 2009 Day Care Flexible Spending Account. This deadline is one month longer than the 2008 plan year. For 2008, the claims submission deadline remains March 31, 2009.

Child Care Tax Credit Versus Day Care Flexible Spending Account

You may not use the Day Care Flexible Spending Account for expenses you claim on your tax return. However, depending on your income level, you may find that the Day Care Flexible Spending Account generates more tax savings than the Child Care Tax Credit. Additionally, with the Day Care Flexible Spending Account, tax savings automatically occur each pay period. Consult with your tax advisor or refer to IRS Publication 503, Child and Dependent Care Expenses (PDF). 

Example of Day Care Flexible Spending Account (FSA) Savings

For details on the Day Care Flexible Spending Account, see chapter 6 of the Benefits Book.