Dependent Care Accounts (DCA)

A DCA allows you to contribute a chosen amount of your pre-tax income to a designated account or accounts, from which you are reimbursed for eligible dependent care expenses. Qualifying expenses include those that enable you to attend work or school, such as pre-school tuition or payment to an eligible daycare provider.

Eligible dependents under a DCA include children under the age of thirteen or dependent adults who require special care in your absence.

Reimbursements from your DCA are provided to you as soon as contributions to your account are received from your employer.

Q: Who is considered a qualified dependent for reimbursement of dependent care expenses?
A: Your dependent children under the age of 13 or a dependent spouse or other adult physically not able to care for himself or herself is considered to be a qualified dependent, if their dependent care expenses could qualify for the federal income tax credit on your tax return.

Q: What if my dependent care expense is in excessof the amount in my account?
A: You will be reimbursed from the balance of contributions in your account. Any excess reimbursement claim will be carried forward. As additional contributions are made into the account, you will be reimbursed at that time.

Q: Can I switch dollars between my DCA and FSA accounts?
A: No. The dollars must be used in each account as specified on the election form.

Q: What happens if I don’t incur enough expenses to get back the money deposited into my reimbursement account?
A: Any expense dollars not used for expenses are forfeited. This is what is known as the “use it or lose it” provision of Section 129. It is very important to be conservative in estimating your expenses for the plan year.

Q: Can I take the tax credit for the dependent care deduction on my income tax return if I am in this plan?
A: No. Expenses reimbursed under this plan may not be used when calculating your dependent care tax credit. Sometimes it is more advantageous to take the dependent care tax credit on your tax return than to participate in the dependent care expense reimbursement account. You should discuss which alternative is the best for you with your tax advisor.