About The Dependent Care Reimbursement Account

You may use the DCRA to pay the day care or elder care expenses you incur in order for you and your spouse (or you only if you are single) to work or look for work.

For a general listing of eligible and ineligible expenses, see below. For more detailed information about eligible dependent care expenses, you should obtain a copy of IRS Publication 503, available from your local IRS office, or on the IRS Website at www.irs.gov/formspubs.

Note: The DCRA may not be used to pay for the health care expenses you incur on behalf of your dependents. Such expenses may, however, be eligible for reimbursement through the Health Care Reimbursement Account.

Back to Top

Who Is Eligible

You are generally eligible to enroll in the DCRA if you are eligible to participate in FlexSolutions, the Company's flexible benefits program, as defined in Who Is Eligible. Current tax laws also require that you have an eligible dependent (as defined Additional Eligibility Rules below) and that you be one of the following...

Single and working.
Married and:
- both you and your spouse work (or are looking for work)
- your spouse is a full-time student for at least five months of the year, or
- your spouse is mentally or physically disabled and unable to care for your eligible dependent(s).
Divorced or legally separated and have custody of your child, even if your former spouse claims the child for income tax purposes. Generally, you must be able to claim the individual as a dependent on your tax return. However, special rules apply for children of divorced or separated parents. If you are divorced or separated, and provide at least partial support for your child, your child care expenses may be eligible. Also, while the parent with custody is usually able to claim dependent care expenses, you cannot do so if you have waived the right to claim your child as a dependent. You can find complete details about DCRA rules relating to children of divorced or separated parents in IRS Publication 503, available at your local IRS office or via the IRS Website at www.irs.gov/formspubs.

Additional Eligibility Rules

To receive reimbursement for eligible dependent care expenses, those expenses must be incurred to provide care for a dependent...

Who lives with you most of the time,
Who is claimed as a dependent on your federal income tax returns,
For whom you are at least primarily (more than 50%) responsible for his or her support, and
Who is either:
- under age 13, or
- physically or mentally unable to care for himself or herself, regardless of age (this could include care for a disabled spouse or elder care for parents living with you as long as you claim this individual on your tax return).

In addition, if your day or elder care provider is your own child or relative, the charges are eligible for reimbursement only if...

The child providing care is at least age 19 before the end of the calendar year in which claims were incurred and you do not claim that child as a dependent on your income tax return, or
You do not claim the relative as a dependent on your income tax return.

Back to Top

Contribution Limits

Generally, you may contribute as much as $5,000 in pre-tax dollars to your DCRA each year, depending on your marital and income tax filing status. If you decide to enroll, you must contribute at least $60 annually.

The table below summarizes the amount you may contribute. These maximums are the most you may contribute annually—regardless of how many months you actually participate. These maximums do, however, include any money you contributed during the same calendar year to a DCRA sponsored by a previous employer.

Dependent Care Reimbursement Contribution Limits
If you are...	You may contribute up to...
Single, or Married and file a joint tax return, and your spouse does not have access to a DCRA	$5,000
Married and file a joint tax return, and your spouse has access to a DCRA	$5,000 (you and your spouse combined for the year)
Married and your spouse earns less than $5,000 per year	Any amount up to your spouse's annual earnings
Married, and you and your spouse file separate tax returns	$2,500 for the year (if your spouse has access to a separate Account, he or she may also contribute $2,500 to his or her Account)
Married and file a joint tax return, and your spouse is a student or disabled	$2,400 (for one dependent), or $4,800 (for two or more dependents)

Changing Contribution Amounts

In general, your DCRA enrollment decision remains in effect for the entire Plan year. You may change or stop your contributions during Open Enrollment only, unless you have a qualifying "change in status" that allows you to change your contribution amount. For more information, refer to Changing Your FlexSolutions Elections During The Year, or contact your local Human Resources representative.

Back to Top

Eligible and Ineligible Expenses

The table below illustrates the most common eligible and ineligible dependent care expenses. For additional details, you should obtain a copy of IRS Publication 503, available from your local IRS office or on the IRS Website at http://www.irs.gov/formspubs.

Please be advised that the IRS can amend the list of eligible expenses at any time, with or without notice.

Eligible Dependent Care Reimbursement Account Expenses
In-home services provided by a babysitter, nursing aide or attendant	Services provided by a day-care facility for children or adults (the facility must be licensed if it provides care for more than six individuals who do not normally reside there)
Services provided by a housekeeper or maid, if that person is responsible for the care of an eligible dependent during the day	Care provided outside your home (if the eligible dependent is over age 13, he or she must be disabled and spend at least eight hours per day in your home)
Practical nursing care for an adult, in or outside the home	Any taxes you pay as the employer of a dependent care provider
Please note: To be eligible for reimbursement, the expenses incurred must be for the care of an eligible dependent as described under Additional Eligibility Rules
Ineligible Dependent Care Reimbursement Account Expenses
Any amounts paid to provide food, clothing or education (certain exceptions may apply)	Transportation to and from the place where care is provided
Services outside your home at a camp where your child, disabled spouse or dependent stays overnight	Tuition expenses for dependent children in first grade or above
Payments made to an individual whom you could claim as a dependent on your income tax return; or, care provided by your child whom you do not claim as a dependent, but who would be under age 19 at the end of the current tax year.

Back to Top

IRS Reporting Requirements

The IRS requires you to provide certain information about your day care provider on your federal tax return (Form 2441). (This form is available from your local IRS office or via the IRS Website at http://www.irs.gov/formspubs.) If you do not provide this information, the money you receive from your DCRA will become taxable income.

The amount of your DCRA contribution will be reported to the IRS, as required by law, and will appear on your W-2 Form.

The following information must be included on your federal tax return for each year in which you participate in a DCRA...

The provider's name and address; and
For care provided by an:
- individual, the individual's Social Security Number; or
- organization (or center), the organization's tax identification number, unless it is a non-profit organization, in which case you should write "tax-exempt" in lieu of providing the tax identification number.

Back to Top

The Dependent Care Reimbursement Account or Federal Tax Credit?

The DCRA is not the only tax-advantageous way to offset eligible day or elder care expenses—the IRS also offers a federal tax credit for dependent care expenses. Your tax filing status, income and number of dependents will determine which is the best method for you. Here are some general guidelines based on current tax law...

Depending on your income level, you can take a tax credit equal to 20 or 35 percent of your annual dependent care expenses on your federal income tax return. These expenses are limited to $3,000 for a single dependent or $6,000 for two or more dependents receiving care.
You can’t use both the DCRA and the tax credit for the same expenses. The IRS reduces your available tax credit by $1 for each $1 of reimbursement you receive from such an account. For example: If you have a single eligible dependent receiving care, and you receive $4,000 in reimbursement from your DCRA, you won’t be eligible for the tax credit since your $4,000 reimbursement is greater than the $3,000 IRS allowable tax credit.

Because tax laws are complex and change often, and affect individuals in different ways, we encourage you to discuss your situation with a qualified tax advisor.

Back to Top