Dependent Care Account
Participating in a dependent care flexible spending account is like receiving a 30% discount from a care provider. Encourage employees to enroll today to start saving.
What is a dependent care flexible spending account (DCA)?
A DCA is a flexible spending account that allows employees to set aside pre-tax dollars for dependent care expenses. Since DCA contributions are deducted from employees paychecks pre-tax, their taxable income is reduced. Participants enjoy a 30% average tax savings on their annual DCA contributions.
Why enroll in a DCA?
Child and dependent care is a large expense for many American families. Millions of people rely on childcare to be able to work, while others are responsible for older parents or disabled family members. If an employee pays for care of dependents in order to work, they'll want to take advantage of the savings this plan offers. Money contributed to a DCA is free from federal income, Social Security, and Medicare taxes and remains tax-free when it is spent.
Sample Employee Savings:
* For illustrative purposes only. Based on a typical tax situation of 15% federal tax, 7.65% FICA, and 5% state income tax. Other tax situations may be different. Consult a tax advisor.
Annual Contribution Limits
The IRS limits annual contributions to $5,000 on income tax returns for single or married filing jointly, and $2,500 for married filing separately.
DCA funds cover care costs for eligible dependents while at work:
These items are never eligible for tax-free purchase with DCA funds:
Copyright © Accrue Solutions | All Rights Reserved