Dependent Care
What is a Dependent Care Flexible Spending Account (DCFSA)?
A Dependent Care FSA allows you to set aside money pre-tax to pay for eligible child and adult care expenses, helping you save on taxes while covering essential care costs. This account is especially helpful for working parents or caregivers who need assistance with dependent care while they work.
Plan Features
Everything You’ll Need to Know
Dependent Care Flexible Spending Account (DCFSA)
Greenlight Networks offers full-time employees the option to enroll in a Dependent Care FSA, a tax-advantaged benefit that helps you save money on eligible dependent care expenses by using pre-tax dollars. This can significantly reduce your taxable income and lower your overall tax liability.
What is a DCFSA?
A DCFSA is designed to help cover the cost of care for dependents so you can work. It’s not for medical expenses—that’s what a Health Care FSA is for—but rather for childcare and elder care services.
Key Features of a DCFSA
Eligible Expenses Include:
- Day care for children under age 13
- Adult day care for dependents who cannot care for themselves
- Preschool and nursery school
- Licensed day care centers
- Before- and after-school programs
- Summer day camps (non-overnight)
- Application fees for day care
- Certain lessons (dance, music, sports) if part of a structured care program
2026 Annual Contribution Limits:
- Up to $7,500 per household
- $3,750 if married and filing separately
Use-It-Or-Lose-It Rule: The IRS requires that all funds in a DCFSA be used for qualified expenses during the plan year. Any unused funds are forfeited unless your plan offers a grace period or carryover option—check your plan details for specifics.
Important Difference from a Health Care FSA:
- Health Care FSA: Covers eligible medical expenses for you and your dependents.
- Dependent Care FSA: Covers dependent care expenses, such as child or elder care.
Why Consider a DCFSA?
- Tax Savings: Contributions are deducted from your paycheck before taxes, reducing your taxable income.
- Budget-Friendly: Helps offset the high cost of childcare or elder care.
- Convenience: Funds are available as you contribute throughout the year (unlike a Health Care FSA, which provides the full annual election upfront).
Important Details
- Funds must be used for qualified dependent care expenses incurred during the plan year.
- Contributions are subject to IRS limits—be sure to review these during open enrollment.
- DCFSA funds are use-it-or-lose-it, meaning any unused balance at the end of the plan year may be forfeited.
A Dependent Care FSA is a smart way to manage care costs while maximizing tax benefits. It’s especially helpful for working parents or those caring for dependent adults.