Dependent Care Flexible Spending Accounts FAQs
If you are currently incurring dependent care expenses, you are probably paying for these expenses in after-tax dollars and taking the Federal Child and Dependent Care Income Tax Credit when you file your income taxes. The IRS limits the federal income tax credit to eligible expenses of $3,000 for one dependent and $6,000 for two dependents or more. The Dependent Care FSA limit is $5,000 regardless of the number of dependents; however, you can claim the remaining $1,000 toward the Federal and Dependent Care Income Tax Credit.
Whether you use the federal income tax credit or the Dependent Care Flexible Spending Account, you must complete and submit IRS Form 2441 with your annual income tax return. This form provides the IRS with information on your dependent care provider and your dependent care expenses for the tax year.
You may contribute up to $5,000 for the full plan (calendar) year. If you are married and your spouse's employer also offers a Dependent Care Flexible Spending Account or both you and your spouse work at MSU, your combined total annual contribution cannot exceed $5,000. If you are married and you file a separate income tax return, contributions cannot exceed $2,500 for each of you, with a $5,000 total maximum. Utilize the Dependent Care FSA Worksheet to assist with the planning of your Dependent Care FSA contribution . A listing of the monthly and bi-weekly pay dates can be found at http://www.ctlr.msu.edu/COPayroll . You will need to plan carefully, as the IRS requires any unused money left in your account at the end of the plan year to be forfeited.
The total amount of expenses you submit for reimbursement in a plan (calendar) year must not exceed the lesser of your earned income, your spouse's earned income if you are married, or $5,000. For example, if your working spouse earns $4,000 a year, the maximum amount you can be reimbursed is $4,000. If your working spouse earns $20,000, the maximum amount you can be reimbursed is $5,000.
For more detailed reimbursement guidelines, visit the IRS website .
Note: If you use the Dependent Care Flexible Spending Account, you cannot use the federal income tax credit for the same expenses.
Yes, this change qualifies as a life event. Please contact MSU Human Resources at 517-353-4434 or SolutionsCenter@hr.msu.edu for more information.