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What can a Dependent Daycare Reimbursement Account be used for?

The Dependent Daycare Reimbursement Account enables employees to pay for out-of-pocket, “work related” dependent daycare costs with pre-tax dollars. In some cases, this account may be used for adult daycare (the cost of daytime supervision of an adult child, spouse, or dependent parent who is incapable of caring for themselves). Daycare services may be provided by a friend or family member and still be eligible for reimbursement through the plan.

Under this type of account, a “dependent” is a child under the age of 13 (until the day of their 13th birthday) or an adult dependent who is not able to care for themselves.  The dependent must live with you and be claimed as a dependent on your tax return in order to be eligible.

What is a “work related” expense?

Under the regulations, your Dependent Daycare expenses need to be “work related.”  This means that the expenses must be incurred while you (and your spouse if married) are working or actively looking for work.  Volunteer work, either unpaid or nominally paid, do not qualify as “work.”  However, if your spouse is a full-time student, your daycare expenses may be eligible.

What kinds of expenses are covered under a Dependent Daycare Reimbursement Account?

The following list identifies eligible dependent daycare related expenses as defined by the Internal Revenue Service. These expenses are eligible for reimbursement through your Dependent Daycare Account provided they are incurred by your eligible dependents during the plan year, are for both you and your spouse (if applicable) to work, and have not been reimbursed through any other benefit plan.

  • After-school care or extended day care programs (supervised activities for children after the regular school program that are not educational in nature)
  • Before-school care or extended day care programs (supervised activities for children after the regular school program that are not educational in nature)
  • Day Camp
  • Preschool

The following expenses are not eligible: This is not meant to be a comprehensive list, but rather a list of ineligible items commonly submitted for reimbursement.

  • Classes (music, dance, swimming, etc.). Such classes are primarily educational in nature.
  • Kindergarten
  • Overnight Camps
  • Lessons (music, dance, swimming, etc.).  Such lessons are primarily educational in nature.

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