| Q |
How can payroll deductions to the DCAAccount be a benefit if I still have to pay for my dependent care expenses with my own money? |
| A |
The money deducted from your paycheck is put into your DCAAccount before state, federal, social security and city (if applicable) taxes are taken. This allows you to be reimbursed with pre-tax, or whole dollars. State employees save several hundred dollars annually by participating in the DCAAccount. The amount you save is determined by the amount of money you set aside and your taxable household income. For an estimate of your savings, use the DCAAccount online calculator. |
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| Q |
How do I get paid back? |
| A |
After the services have been provided, you submit a DCAAccount reimbursement request form to FBMC, along with a receipt or invoice for the services rendered-or your care provider may simply countersign the claim form. You can send in reimbursement request forms as often as you like and in any amount. |
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| Q |
Can I pay my mother to care for my kids? |
| A |
Yes, as long as your mother is not your dependent and will give you her social security number. You need her social security number so that you can report her as the caregiver when you file claims for reimbursement and when you file your income tax return. Your mother should report the payments as income.
If your mother (or other individual related by blood or marriage) is your care provider and changes her rates, a change in cost of care in this situation is not considered an eligible Change in Status by the IRS. |
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| Q |
Can I pay my spouse? |
| A |
No. You can't pay your spouse to care for your children. You also cannot pay your own child under age 19, or any other person you claim as a dependent. You can pay your mother, father, or any other relative, but they must provide you with their social security number for reimbursement to occur. |
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| Q |
Can I use the DCAAccount to pay a maid, cook, or housekeeper? |
| A |
Yes, if the intent of the service is to provide your dependent with care while you work. |
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| Q |
What about kindergarten? Or private elementary school? |
| A |
Tuition costs from kindergarten and up are not eligible. |
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| Q |
What if my child is cared for at my church? |
| A |
In the case of a church or other religious affiliated tax-exempt day care center, you need only provide the name, address, and tax exempt status of the religious institution. |
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| Q |
Can I participate in the DCAAccount if I use an au pair to care for my children? |
| A |
Yes, you may use an au pair to provide dependent care services. But only the amounts paid to cover wages, taxes on those wages, and expenses incurred for lodging and food the au pair consumes in your home are eligible for reimbursement. Au pair agency fees and/or transportation fares are not considered expenses paid for the care of the dependent, and are therefore not eligible for reimbursement. Be sure you complete and file the appropriate tax forms with the Internal Revenue Service. |
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| Q |
What if my babysitter won't give me her social security number? |
| A |
In order to receive reimbursement, you must provide FBMC with your caregiver's social security number. Therefore, it is important that you discuss this program with your caregiver before electing to participate. |
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| Q |
Who determines whether a child or other dependent is mentally or physically incapable of self-care? |
| A |
You as the participant must determine if your dependent is physically or mentally incapable of self-care. If audited, you may have to substantiate this to the IRS. |
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| Q |
Can I pay for my mentally disabled child's overnight expenses, since he's at the school during the day? |
| A |
No. This account is only for daycare while you work-not for residential care, tuition for special educational schools, or medical care. |
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| Q |
Do my child's summer camp expenses qualify if occasional sleep overs are a part of any overall day program? |
| A |
Probably, but the camp program must be a day camp. Sleep over camps do not qualify and your child must be under age 13. |
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| Q |
My elderly mother requires care. I pay someone to take care of her in her own home while I work. Is this an eligible expense? |
| A |
No. The IRS requires that the person needing care reside in your home at least eight hours a day. |
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| Q |
My 20-year old son is mentally disabled and lives in my home. We pay a neighbor to care for him while we work. Is this cost reimbursable? |
| A |
Yes. If your disabled dependent is unable to care for himself, and your spouse also works, then the costs of caring for him in your home, or at a special day care facility, are reimbursable. The same rules apply if your spouse is disabled. |
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| Q |
I have a disabled friend who resides with me and for whom I contribute a sizable portion of financial support. I cannot claim him as a dependent for income tax purposes. Can I establish a Dependent Care Advantage Account for his care while I'm at work? |
| A |
Yes, as long as you maintain a household (i.e., furnish over half the cost of maintaining the household) in which the disabled individual resides at least eight hours a day. Such expenses for the well-being and protection of the disabled individual incurred while you are at work are eligible for reimbursement under the DCAAccount. The disabled individual can be an extended family member or a non-relative who lives in your household for the tax year as a family member. |
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| Q |
If I should incur an eligible change in status allowing me to enroll in the Flex Spending Account during the year, how far back may I calculate my expenses? |
| A |
If you join after the open enrollment period through an eligible change in status, your expenses would be eligible from the date your change in status form is received or the date you experienced the change, whichever is later. |
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| Q |
What if my child turns age 13 during the middle of the Plan Year? |
| A |
The IRS regulations permit you to cancel your enrollment in the DCAAccount when your child reaches age 13. |
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| Q |
My child was expelled from daycare because of a biting habit and is now being cared for by a family member, free of charge. Can I terminate my DCAAccount? |
| A |
Yes, since there has been a significant change in the coverage initiated by your care provider. A participant may elect to terminate his or her salary reduction for care expenses if the coverage provided by an "independent third party" (your daycare center) is significantly curtailed or ceases during the period of coverage. |
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| Q |
What if I'm laid off, fired, or quit my job? |
| A |
If you leave State service during a Plan Year, you retain your account through the end of that Plan Year. This means that although you cannot make any additional contributions to your account, you have until December 31st of the Plan Year to incur eligible expenses-and until March 31st of the following year to file a reimbursement request. |
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| Q |
What if my spouse and I have separated, but are not yet "legally" separated? Is that a "Change in Status?" |
| A |
No. But other circumstances typically surrounding such a separation might qualify, such as a change in employment schedule. In addition, the maximum allowable tax-free reimbursement could be reduced, for example, from $5,000 to $2,500 if you and your spouse use the tax filing status of "Married Filing Separately."
However, even in the situation described above, if you provide more than one-half the household support for a dependent who lives in your household more than six months in a year, you may be eligible for "Head of Household" tax filing status, which would allow the $5,000 maximum reimbursement for dependent care expenses. |
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| Q |
If I become legally separated, how does this affect participation in the plan? |
| A |
A participant who is legally separated is not considered married for purposes of the DCAAccount and may be reimbursed up to $5,000 of eligible expenses-even if filing a separate tax return. Legal separation would constitute a change in status. |
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| Q |
Can my spouse and I both use the $5,000 limit? |
| A |
No. There is a $5,000 limit on expenses that may be reimbursed each calendar year for married couples who file a joint return ($2,500 limit for each spouse per year if you file separate income tax returns). If your spouse's employer offers a similar plan, remember you cannot be reimbursed for the same expenses by two plans. |
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| Q |
My spouse is a student. Can we participate in the DCAAccount? |
| A |
Yes. However, the maximum you can contribute to the DCAAccount is determined by the earned income of you and your spouse. As a student, the IRS considers your spouse to be gainfully employed. Earned income is calculated as not less than $250 for one qualifying dependent and $500 for more than one qualifying dependent for each month the spouse is a student.
For example, if you have two children in need of care, and your spouse is a student nine months out of the year and earns no other income, the maximum you can put into the DCAAccount is $4,500.
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| Q |
How do I know if the Federal Tax Credit or the DCAAccount is better for me? |
| A |
We encourage you to use the DCAAccount online tax calculator to help you choose between the available taxable and tax-free benefits, or a combination of both. As the taxpayer, you must determine whether participation in the DCAAccount, claiming a federal and state tax credit or exclusion, or using a combination of the taxable and tax-free benefits, is best for you. Your decision will depend on a number of factors such as your tax filing status (e.g., married, single, head of household), number of qualifying dependents, amount of dependent care expenses, earned income, etc. Consult your tax advisor or the IRS for additional information.
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| Q |
Can I take the Federal Tax Credit and be in the DCAAccount, too? |
| A |
You cannot use the Federal Tax Credit and the DCAAccount for the same expenses. However, if you underestimate your DCAAccount contribution, the tax credit can be used for any remaining expenses up to the maximum allowed by the tax credit provisions.
The amount reimbursed through your DCAAccount reduces dollar-for-dollar the amount that can be used to calculate the Federal Tax Credit. Use the DCAAccount online tax calculator to find out how to maximize your savings. |
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| Q |
Will my dependent care deductions be reported to the IRS? |
| A |
Yes. Your deductions will be reflected on your W-2 form in Box 10. You must file IRS Form 2441 with your tax return (or Form 1040A Schedule 2 Child and Dependent Care Expenses for Form 1040A filers). |
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| Q |
I am a member of the DCAAccount Program and have enrolled for the full $5,000. I know I need to file Form 2441 (or Form 1040A Schedule 2 Child and Dependent Care Expenses for Form 1040A filers) with my federal return. Do I need to file the New York State form IT 216 with my state income tax return? |
| A |
No. You need only file IT 216 if you are filing for the income tax credit from New York State. |
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| Q |
Will my Flex Spending Account deductions continue if, due to long-term illness, I begin drawing upon my social security benefit? |
| A |
No. Flex Spending Account deductions can only be taken from checks issued through the Office of the State Comptroller. Additionally, if you are collecting disability payments through the Income Protection Plan (IPP) no deductions can be taken, since those funds come directly from the insurance company. |
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| Q |
I am divorced, and have physical custody of my seven year old daughter. However, my ex-husband has retained the legal right to claim an exemption for our daughter for income tax purposes. Am I eligible to participate in the DCAAccount? |
| A |
Yes. If a participant has physical custody of a child under the age of 13, but has granted the non-custodial parent the right to claim the child as a dependent, the child is considered your dependent for the purpose of participation in this program. |
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