Pay for care with pre-tax dollars.
A Dependent Care FSA lets you set aside up to $5,000 a year before taxes for daycare, after-school care or eldercare. Enter your costs and tax rate to see how much you keep.
Your care and taxes
Pre-tax FSA dollars also dodge FICA. Standard rate is 7.65%.
What this means for you
Your care bill, with and without the FSA
Net cost of care after tax savings
Tax savings at each contribution level
Your FSA scorecard
Savings by contribution and tax rate
Estimated annual tax savings for common contribution amounts across a couple of combined tax rates. Your row is highlighted.
| Contribution | At 25% | At 35% | Your rate |
|---|
Dependent Care FSA, explained
Dependent Care FSA Benefit
Up to $5,000 per household ($2,500 if married filing separately) of dependent care costs paid pre-tax. Saves 25-40% effectively for typical earners. Eldercare also qualifies for dependents you claim.
Who Qualifies as 'Dependent'
Child under 13 in your care. Spouse or dependent of any age who is physically or mentally incapable of self-care and lives with you 8+ months a year. Both parents must work (or one full-time student).
FSA vs Tax Credit
Dependent Care FSA: pre-tax pay reduction (saves marginal rate + FICA). Child & Dependent Care Tax Credit: 20-35% non-refundable credit. Higher earners: FSA usually wins. Low earners: credit may win. Cannot double-dip on same expenses.
Use-It-or-Lose-It
Unlike HSA, FSA funds expire end of year (some plans allow $640 carryover or 2.5-month grace period). Overestimating = forfeit. Plan carefully.
Common questions
Can both spouses contribute?
Combined household max is $5,000. Splitting between spouses' employers doesn't increase limit.
Does summer camp count?
Day camps yes (if you're working). Overnight camps no, IRS specifically excludes. Verify before paying.
Can I use FSA + Tax Credit?
Yes, but not on same expenses. Up to $3,000/child or $6,000/two+ children for credit. After FSA, remaining costs can use credit.
What if I overestimate?
Forfeit unused funds. Plan conservatively, easier to miss tax benefit than to forfeit money.
Can self-employed use this?
No, FSA is employer-sponsored. Self-employed use Dependent Care Tax Credit instead.
Estimates for planning only. The 2024 Dependent Care FSA limit is $5,000 per household ($2,500 if married filing separately). Actual savings depend on your real marginal rates, your plan rules and your eligible expenses. FSA funds are use-it-or-lose-it, so estimate carefully and confirm details with your plan and a tax advisor.