A Dependent Care Account (DCA) is a type of FSA: a pre-tax benefit account employers offer for qualifying dependent care expenses. It lets you use pre-tax dollars for child and adult care programs that allow a caregiver to work.
How a Dependent Care Account works
- Enrollment. During the open enrollment period, employees elect to contribute a certain amount of their pre-tax income to a Dependent Care FSA. The maximum contribution limit is set annually by the IRS.
- Funding. The chosen amount is deducted from the employee's paycheck before taxes are applied, which reduces taxable income.
- Expenses. The employee uses the funds to pay for qualified dependent care expenses. These typically include childcare services for children under 13, before- and after-school programs, and care for dependents who are physically or mentally incapable of self-care.
- Reimbursement. The employee submits claims to the FSA administrator for reimbursement, providing receipts or other proof of payment for the care services received.
- Use-it-or-lose-it. Any funds left in the account at the end of the plan year, or the grace period if one is offered, are forfeited.
Note: This plan is not carded, so there is no debit card. Every expense is paid out of pocket and then claimed.
Note: Some plans offer a short grace period, but this varies by employer. Review your plan documents, found on the Consumer or Employer portal, to confirm.
Key features
| Feature | Detail |
|---|
| Eligibility | Care must be for a dependent under age 13, or for a spouse or other dependent who is physically or mentally incapable of self-care. The care must enable the employee, and their spouse if applicable, to work or look for work. |
| Qualified expenses | Daycare, preschool, before- and after-school programs, and sometimes summer day camps. Does not cover overnight camps, or care provided by relatives unless they are licensed care providers. |
| Contribution limits | For the 2025 tax year, up to $5,000 per year if married and filing jointly, or $2,500 if married and filing separately. Limits can change annually, so check the latest figures. |
| Tax benefits | Contributions are made with pre-tax dollars, which can lower taxable income. The same expenses cannot be claimed for both the Dependent Care FSA and the Child and Dependent Care Tax Credit. |
Frequently asked questions
How much can I contribute to a dependent care account?
For the 2025 tax year, employees can contribute up to $5,000 per year if they are married and filing jointly, or $2,500 if married and filing separately. The maximum contribution limit is set annually by the IRS and can change, so check the latest figures.
Does a dependent care account come with a debit card?
No. This plan is not carded. You pay for care out of pocket and then submit claims to your FSA administrator, providing receipts or other proof of payment for the care services you received.
Is summer camp a qualified dependent care expense?
Summer day camps can sometimes qualify, but overnight camps are not covered. Care provided by relatives is also not covered unless they are licensed care providers.
What happens to money I do not spend by the end of the plan year?
Dependent Care FSAs operate under a use-it-or-lose-it rule, so any funds left in the account at the end of the plan year, or the grace period if one is offered, are forfeited. Grace periods vary by employer, so review your plan documents on the Consumer or Employer portal.
Can I use a dependent care FSA and also claim the Child and Dependent Care Tax Credit?
No, not for the same expenses. Employees cannot claim the same expenses for both the Dependent Care FSA and the Child and Dependent Care Tax Credit on their tax return.
