Dependent Care Savings Account

[ijack]

Someone at work asked me this question and I can't figure out the answer.
She had a change in child care and now has family caring for her kid, so she isn't paying anyone. She still has money in her dependent care FSA. Is it like a "normal" FSA in that she loses that at the end of the year, or can she get it back minus the taxes that she would have paid on it if it hadn't been taken out pre-tax.

[formerlyak]

It may depend on the play, but I know with my plan it is use it or lose it. She may want to see if there are any cool one week day camps over the holidays that her kids might enjoy attending and send them to that and use the DSA to pay for it so she doesn't lose the money.

[formerlyak]

Oh, also sometimes babysitting counts IF you NEED the coverage in order to work. So not just for a date night, but for example, I am a single parent and if I have an evening event at work that I need to go to and have to pay someone to watch my child during that time I can request to be reimbursed for that on my plan.

[ijack]

This is the list of eligible expenses - does it mean that if she has to buy food for her family while they are watching their kid that it could be reimbursed? How would one even do that? Would they (the family doing the day care) be taxed on that "benefit" then? This totally sucks for her
Eligible Dependent Care Expenses

Licensed nursery schools
Qualified child-care centers
Adult day-care facilities
After-school programs
Baby-sitters inside or outside the home while you are at work (as long as the individual is not your child under age 19, or anyone you or your spouse can claim as a dependent for federal income tax purposes).
FICA and other taxes you pay on behalf of a day-care provider
Day camps for dependent children under age 13
Preschool tuition
Meal and lodging expenses provided for your caregiver. This includes additional rent and utilities, as well as food.

[ECB]

I'm pretty sure it's "use it or lose it" across the aboard. It's IRS regulations - not company regulations.

[formerlyak]

Aug 22, 2012 11:59:08 GMT -5 ijack said:

This is the list of eligible expenses - does it mean that if she has to buy food for her family while they are watching their kid that it could be reimbursed? How would one even do that? Would they (the family doing the day care) be taxed on that "benefit" then? This totally sucks for her
Eligible Dependent Care Expenses

Licensed nursery schools
Qualified child-care centers
Adult day-care facilities
After-school programs
Baby-sitters inside or outside the home while you are at work (as long as the individual is not your child under age 19, or anyone you or your spouse can claim as a dependent for federal income tax purposes).
FICA and other taxes you pay on behalf of a day-care provider
Day camps for dependent children under age 13
Preschool tuition
Meal and lodging expenses provided for your caregiver. This includes additional rent and utilities, as well as food.

I think the bolded part refers to expenses related to a live-in care provider.

[sweetnsour]

Did she claim all the weeks when she was paying for the care? I know for me 20 weeks of day care for my daughter equals 5000 so even if I stopped daycare now, I can claim all the weeks she went and not lose anything. I hope this makes sense.

[ijack]

She has claimed it all and it looks like she'll lose about $1500 for the year. What a bummer. I mean I realize no one is at fault, it just stinks to lose money like that!

[ECB]

Aug 22, 2012 12:11:09 GMT -5 @fivedogs said:

or consider paying the family members.

This!! I'd much rather someone get that $$ vs. losing it!

[definitelyO]

She will lose it. She cannot claim it as reimbursement for the family members unless she is paying them above the table and they claim the income on their taxes. you have to submit a FEIN with the reimbursement request - so if she submits a reimbursement and they don't submit income it could be a problem.

[ijack]

yeah, it doesn't sound like it's above the table. Her dad died and her mom moved in with them and is watching her kid now to save her money (which may not actually save her money). I'll let her know she'll lose it and then let her decide what to do.
and thanks everyone for your help!

[ijack]

Yeah, she lives in an area that isn't super expensive and used an in home care giver or something. I'm also surprised - I could use that in like 2 months.

[egeiger]

Can she call HR to see if the change counts as a qualifying event? Maybe they can change her withholdings to stop taking out money now through the rest of the year.

[formerlyak]

Aug 22, 2012 12:45:10 GMT -5 egeiger said:

Can she call HR to see if the change counts as a qualifying event? Maybe they can change her withholdings to stop taking out money now through the rest of the year.

This is a good idea. Or she may be able to appeal through the company that manages the DSA.

[pacificrules]

Aug 22, 2012 12:54:52 GMT -5 formerlyak said:

Aug 22, 2012 12:45:10 GMT -5 egeiger said:

Can she call HR to see if the change counts as a qualifying event? Maybe they can change her withholdings to stop taking out money now through the rest of the year.

This is a good idea. Or she may be able to appeal through the company that manages the DSA.

I think this is worth a shot. We were going to take DD out of daycare and have her at a friend's house. Our HR dept asked if I was paying *nothing* for care and sounded like if that were the case I could change my deductions and not lose all of the money.