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Understanding Savings Accounts:
Everything you need to know about Dependent Care FSAs
A Dependent Care Flexible Spending Account (FSA) is a pre-tax account that can be used for day care, elder care, and even care for dependents with disabilities.
The money you put in your Dependent Care FSA is taken from your pay BEFORE federal, state or social security taxes. This decreases your taxable income and increases your take-home pay. When choosing your benefits, you must decide how much money you want to put in your Dependent Care FSA for the entire year — although there are limits. The amount you choose for the year is taken out of your paycheck in equal amounts and placed in your Flexible Spending Account. With the Dependent Care FSA, you are not able to carry over any unused dollars, so use it or lose it!