Dependent Care FSAs help you save money and take care of your loved ones at the same time.
Once your child turns 13, you can no longer use Dependent Care FSA funds for their care.
If they turn 13 mid-year, only expenses prior to their birthday qualify.
FSAs, or Flexible Spending Accounts, are helpful tools sometimes offered by your employer as part of their healthcare benefit packages. The Dependent Care FSA allows you to set aside money from your paycheck for the specific purpose of caring for a dependent. In this case, a qualifying dependent would be a child (including stepchild or foster child) below the age of 13, or a dependent incapable of caring for themselves. This covers adult children with disabilities, elderly relatives who live with you, or a spouse who is incapable of self-care. The IRS defines “incapable of self-care” as someone who cannot dress, clean, or feed themselves because of a disability, or someone who needs constant supervision for their own safety or the safety of others.
The money placed within the Dependent Care FSA is not subject to taxes, which includes the federal income tax, Social Security tax (6.2%), and Medicare tax (1.45%). This means that you save more money through a Dependent Care FSA than you would if you simply used your paycheck to pay for dependent-related costs. You may use the Dependent Care FSA funds for certain qualifying purchases. These include:
- Education: Fees for nursery school, preschool, and daycare centers qualify, as long as they’re below the kindergarten level. You cannot use Dependent Care FSA funds for fees related to the kindergarten level or higher, nor can you use them for summer school or tutoring programs.
- Before- and after-school care: You can use Dependent Care FSA funds to pay for programs that watch your child outside of school hours, even if your child is in kindergarten or a higher grade.
- Day camps: As long as your child doesn’t stay overnight, summer camps and specialty camps, like ones focused on sports, arts, or computer programming, are considered qualifying Dependent Care FSA expenses. If you are caring for an older dependent, adult daycare also qualifies.
- In-home caregivers: You may use Dependent Care FSA funds to pay nannies or babysitters to watch your dependent while you work. If your caregiver lives in your home, their rent, utility fees, and meals are also considered qualifying expenses. However, if you pay them more than $3,000 in cash during 2026, you are considered a household employer and must withhold Social Security and Medicare taxes on those wages.
There are also certain non-qualifying expenses you should also be aware of. This includes:
- Entertainment, food, or clothing: These are not considered as “caring for a dependent,” and therefore do not qualify.
- Overnight camps: You cannot use Dependent Care FSA funds to pay for sleep-away camps, even if the camps have a focus on education.
- Certain relatives when babysitting: Spouses, ex-spouses, or your own children below the age of 19 cannot be paid from your Dependent Care FSA, even if they’re acting as a babysitter. However, you may use Dependent Care FSA funds to pay grandparents, aunts and uncles, or children above the age of 19 (as long as they’re not considered a dependent)
Starting in 2026, you can contribute up to $7,500 into the Dependent Care FSA, which is the maximum per household. This means that if you and your spouse both have Dependent Care FSAs through different employers, your combined total cannot exceed $7,500. If you’re married but file your taxes separately, your limit is $3,750. It’s important to note that employer contributions also count toward the Dependent Care FSA limit. Dependent Care FSAs are use-it-or-lose-it accounts. Once the plan year ends, the money left in the account is forfeited, so be mindful of your expenses. It’s also a good idea to save your receipts for every Dependent Care FSA expenditure, since they’re more than likely needed for claim verification.
