Do you use a Dependent Care Flexible Spending Account?

[Golf4food]

We use both. We submit the daycare claims every two weeks in January, then once per month until about May/June when we have used up the full amount. After that they pay them out the rest of the year. As such we get back $192.36 every two weeks the entire year. Saves us at least $1,200-1,500 in taxes each year. Worth the small hassle up front.

 

[gorkt]

Absolutely, why pay taxes that you don't have to pay? I generally save up in the beginning of the year and then claim a big chunk around may/June to help pay for summer camp. Then I take another big chunk around the holidays and whatever is left over at the beginning of the year.

 

[mistysue]

I do it whenever we can. The funny part about these accounts to me is that the limits to who is allowed to sign up are based on gross income in the last tax filed year- So if open enrollment is in the fall 2013, if you made too much in 2012 you can't get one, even if your 2013 and 2014 incomes are low enough.

It messed us up one year because our income varies wildly. One year our income was too high, so 2 years later we had a random year we couldn't use it, but could both the year in between and the year after.
Also, as a PP said it gets you out of more than just the withholding, suddenly you don't have to pay the extra 8% or so that is SS and Med. It's a good $400 if you max it out.

 

[Crystal824]

We use both the dependent care flex plan and the health saving flex plan. We do the $5,000 for dependent care (although full time daycare for one two year old is almost twice that cost per year) and I apply for reimbursement once per month.

 

[cinmouse]

We do both and the max for each, since our company has a Benny Card...I actually never get reimbursed, just run the card for the expenses.
For the health all the funds are there in Jan unlike dependant care, which you can only use what has been put it, so since my company bases on 24 pay periods (we actually have 26) it is $208.XX each week or $416 a month, which is still less than my monthly daycare rate...
I wish they would raise the limit, as I clearly exceed the $5,000 for only one child and I have two~

 

[5stljayhawks]

bump

 

[Snow Shoe]

Many years ago, beginning in the early 80's, we used it for all three of our kids until they became school age. It was called a Cafateria Plan back then. It was definetly worth every penny it saved us.

 

[Lita]

I do it whenever we can. The funny part about these accounts to me is that the limits to who is allowed to sign up are based on gross income in the last tax filed year- So if open enrollment is in the fall 2013, if you made too much in 2012 you can't get one, even if your 2013 and 2014 incomes are low enough.

It messed us up one year because our income varies wildly. One year our income was too high, so 2 years later we had a random year we couldn't use it, but could both the year in between and the year after.
Also, as a PP said it gets you out of more than just the withholding, suddenly you don't have to pay the extra 8% or so that is SS and Med. It's a good $400 if you max it out.

Never heard of this my husband and I (also my peers) both have fairly high incomes and we are not limited at all. We always claim the max $5K per year.

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[brooke789]

We have a DCSA this year for the first time. Is there really any actual advantage to doing the dcsa vs just writing it off on your taxes? I know when we did our taxes this year we could claim up to $6K where our DCSA maxes out at 5K. So when we do this year's taxes we'll get to claim an additional $1K over what was in the DCSA.

When I've had a Medical Spending account before all of the money was deposited on January 1st and you were basically paying back your company with each of your 'deposits'. I was disappointed to find that the DCSA did not work like this. We pay $1K/month for childcare, so I really wish we had it all available sooner to get reimbursement.

For next year we're seriously considering NOT doing the DCSA and just waiting to write it all off on our taxes to avoid the hassles of sending in claims. We haven't even sent one in yet even though we'd already spent approximately $4K this year.

 

[aprilgail2]

Can you do both? A flexible spending for child care expenses and a health savings? we wanted to do the flex account this year for before school care and youngest preschool tuition, but my employer switched health care plans and enrolled us all into a hsa...

I have had both at once when my daughter was uyoung enough to qualify- I used it for summer camp and then just sent in the claim the beginning of Dec and used it for Christmas! It was a nice $3,000-$4,000 christmas club LOL.

It couldn't be any easier. I only wish they'd raise the limit.

It was just lowered in the past 2 years- prior to that it was 5,000 for medical, now its 2500 and I can burn through that in no time between dentist and glasses and contact lenses!

I do it whenever we can. The funny part about these accounts to me is that the limits to who is allowed to sign up are based on gross income in the last tax filed year- So if open enrollment is in the fall 2013, if you made too much in 2012 you can't get one, even if your 2013 and 2014 incomes are low enough.

It messed us up one year because our income varies wildly. One year our income was too high, so 2 years later we had a random year we couldn't use it, but could both the year in between and the year after.
Also, as a PP said it gets you out of more than just the withholding, suddenly you don't have to pay the extra 8% or so that is SS and Med. It's a good $400 if you max it out.

Wow, I dn't know how much you make but where I work even guys that are making 150,000.00 a year use the flex spending accounts! There is not an income limit on it.

 

[mistysue]

Wow, I dn't know how much you make but where I work even guys that are making 150,000.00 a year use the flex spending accounts! There is not an income limit on it.

This makes me sort of mad- I just spent a little bit searching about this and his employer's documents explain it as being a federal limit- but it doesn't seem to exist anywhere else! They say if you and your spouse have a combined income of over $109,000 you can't use it!
In our lowest year we spent about $14,000 in child care, so it's sort of a big deal for us to get the best benefit to help that we can.

 

[Lita]

We have a DCSA this year for the first time. Is there really any actual advantage to doing the dcsa vs just writing it off on your taxes? I know when we did our taxes this year we could claim up to $6K where our DCSA maxes out at 5K. So when we do this year's taxes we'll get to claim an additional $1K over what was in the DCSA.

When I've had a Medical Spending account before all of the money was deposited on January 1st and you were basically paying back your company with each of your 'deposits'. I was disappointed to find that the DCSA did not work like this. We pay $1K/month for childcare, so I really wish we had it all available sooner to get reimbursement.

For next year we're seriously considering NOT doing the DCSA and just waiting to write it all off on our taxes to avoid the hassles of sending in claims. We haven't even sent one in yet even though we'd already spent approximately $4K this year.

We max out the $5K in our DCSA and then when it comes time to file taxes, our accountant uses our year-end statement and we also get an additional credit of I think $1K to deduct in our taxes. There is an exhibit for this. I think the DCSA is the way to go because you contribute on a pre-tax basis.

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[Lita]

Hmmm interesting, I was told we can only have one. And since our health plan required it for the deductible we couldn't do the other....I may need to look into this more....

Yes you should. We've had a DCSA and a HSA for years.

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[bopper]

I have no idea what the downside even is...

Put it in DFSA then you don't pay taxes on the day care money.
Don't put it in and you do pay taxes on the day care money.

I guess if your daycare person gets paid under the table this won't work.

Obviously you need to be able to estimate how much daycare expenses you have each year but that isn't too hard.

 

[ruadisneyfan2]

I have no idea what the downside even is...

Put it in DFSA then you don't pay taxes on the day care money.
Don't put it in and you do pay taxes on the day care money.

I guess if your daycare person gets paid under the table this won't work.

Obviously you need to be able to estimate how much daycare expenses you have each year but that isn't too hard.

You can still claim day care expenses on your tax return. You still need to save receipts but don't have to submit any unless it's requested.

otoh, one can only take a medical expenses deduction on a fed return for the amount that exceeds a certain % of your total taxable income. (2.5% IIRC?)
For dh & I working FT, we would have to have a LOT of medical expenses to be able to take a deduction. The medical FSA makes it uber easy to pay eligible expenses pre tax.

 

[HM]

My kids are well past the age that we can use it, but we did when they were young. We took out the full $5000 and put in claims every month. As they got older and we had less care needs, the amount lessened and then eventually turned to zero. It's a great way to save some money on taxes.

We use a Flexible Spending plan for health expenses each year as well.