The Dependent Care Flexible Spending Account (FSA) allows you to pay for eligible expenses for care of your child (generally up to age 13, with a limited extension to this age limit as part of COVID-19 relief) or eligible adult dependent. You determine how much you want taken from your monthly paycheck(s), from a minimum of $180 per plan year up to the lesser of:
- $10,500 for 2021; or
- Your total earned income
- Your spouse's total earned income
- If your spouse is incapable of self-care or is a full-time student, you may claim up to $2,400 for one dependent or $4,800 if you claim two or more dependents.
If your spouse is also eligible to participate in a dependent care FSA, your combined contributions should not exceed the maximums stated above. Remember that you forfeit any money you don't use; so calculate your contributions carefully.
As part of COVID-19 relief, the grace period for the 2021 Dependent Care FSA plan year is extended to 12 months after the end of the 2021 plan year. The grace period for 2021 will end Dec. 31, 2022. The run-out period will extend to Jan. 31, 2023. Therefore, funds contributed in plan year 2021 can be used for reimbursement of claims incurred in calendar years 2021 and 2022 and claims must be submitted by January 31, 2023.
Learn more about deadline extensions.