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Dependent Care Reimbursement

Dependent Care Reimbursement

Reduce the cost of dependent care paid by your employees while they’re working by offering a Dependent Care Reimbursement Account. EinsteinHR can set up and administer your plan.

Employees choose to have an amount up to $5,000 transferred annually their gross paycheck, before taxes are taken out, and put into a Dependent Care Account to pay dependent care expenses, which include child day care, in-home dependent care, nursery school and adult day care. If the employee qualifies for the Child Care Credit, the same IRS rules apply. However, the IRS has set additional requirements, and leftover money cannot be returned.

To get reimbursed, employees simply submit their documentation along with a signed reimbursement request, and they receive a tax-free check.

The IRS sets a maximum allowable contribution for Dependent Care Reimbursement FSA at $5,000 per family for a married couple filing jointly, or for a single parent. The limit is $2,500 for a married person filing separately. To qualify, the employee and his/her spouse must be employed or actively seeking employment or attending school full time. Child care expenses paid during a sick leave, holiday, or vacation are not eligible.

Expenses must be for the care of a qualified person, which is defined as one of the following:

  • A child under 13 years old who is a dependent for income tax purposes. If the child turns 13 during the plan year, expenses are no longer eligible for reimbursement. Contributions must continue throughout the year, so employees should plan carefully.
  • A spouse or dependent who is incapable of self-care and regularly spends at least eight hours per day in your home (i.e., an invalid parent). The same rules that apply for child care apply to the care of other dependents, except that the dependent need not be under age 13.
  • The services may be provided in your home or another location but not by someone who is your minor child or dependent for income tax purposes (i.e., an older child).
  • If the services are provided by a day care facility that cares for six or more children at the same time, the facility must comply with state day care regulations.
  • Services must be for the physical care of the child, not for education, meals, etc.

EinsteinHR offers nationwide dependent care reimbursement account credit, get a quote.

For more information on EinsteinHR’s dependent care reimbursement account credit, contact an EinsteinHR dependent care reimbursement account credit specialist at 770-962-1700.