Miami University

The Dependent Care Flexible Spending Account allows for certain out-of-pocket daycare expenses to be paid on a pre-tax basis. Participant elections are payroll deducted and placed in a special account for reimbursements to be issued as claims are incurred. Participants may receive reimbursements up to the total amount contributed through payroll deductions, but not more than their current account balance. Participants cannot change their individual elections unless they experience a qualifying event: birth, death, marriage, divorce, loss of spouse coverage, or dependent child no longer eligible.

Payroll deductions from this account are free of federal and state taxes. Employees who participate in the Dependent Care FSA will see their pre-tax deductions represented in box 10 of their W-2. In addition, participants will be prompted to supply information about their daycare provider (name, address and tax ID number) on Form 2441 or Schedule 2 of their income tax return. Please consult a tax professional for questions regarding income tax preparation.

Participants cannot take both the Dependent Care FSA deduction and the income tax return deduction for the same expense.  Some employees might be better off taking the Federal Tax Credit, depending on their income level, the income level of their spouse and their number of dependents. Typically, the Dependent Care FSA provides more tax relief than the Federal Tax Credit if an employee's taxable family income exceeds $26,000 per year.

Reimbursements are received by faxing, emailing or mailing claim forms and supporting documentation to Chard Snyder. Supporting documentation can be a signed statement from the daycare provider with the dates of service, the dependent's name and the amount. The daycare provider must also provide their name, address and tax ID number (or social security number, if an individual). Services must be incurred while both the participant and spouse are working (unless a spouse is disabled). After the claim has been reviewed and the expense approved, payment is then issued to the participant via direct deposit or a check. Claims are processed daily and payments are issued at least once per week. Expenses can also be paid using a Benny™ Prepaid Benefit Debit Card.

Reimbursements are only issued for eligible expenses incurred by participants' dependents. Any funds remaining in the account at the end of the plan year and after the corresponding 2 ½ month grace period are forfeited.

Participant elections for the Dependent Care FSA are also limited by the following IRS requirements: