Dependent Care FSA covers childcare and adult care expenses you already pay

A Dependent Care FSA lets you set aside pre-tax money to pay for care services — mostly childcare while you work, but also adult day care or overnight care for a parent or other dependent. You can use the money to reimburse yourself for expenses you've already paid, or you can have the FSA pay the provider directly. The money comes from your paycheck before taxes are taken out, which lowers your taxable income for the year.

The IRS sets strict rules about what counts. The care has to happen so you and your spouse (if you have one) can work or look for work. If you're single and working, childcare expenses during your work hours count. If you're married, both spouses usually need to be working or in school for the expense to count — with rare exceptions for a spouse who is disabled or a full-time student.

Key Takeaways

  • Dependent Care FSA money pays for childcare, preschool, after-school programs, and adult day care — but only for hours when you're working or in school.
  • You cannot use the money for overnight camps, tuition at K-12 schools, or babysitting for date nights or social events.
  • The provider must have an Employer Identification Number (EIN) or Social Security Number, and you need their tax ID to claim reimbursement.
  • You set aside money at the start of the year, and most plans have a "use it or lose it" rule — unspent money at year-end does not roll over.

Childcare expenses that count

Daycare centers, in-home daycare providers, nannies, and babysitters all count if the care happens while you work. After-school programs, summer day camps, and preschool (for children under school age) are covered. Before-school care and extended-day programs at your child's school also may have access to. The key is that the primary purpose of the care must be to let you work — not education or enrichment, though those can be side benefits.

If you use a nanny or in-home provider, they must have either an EIN or a Social Security Number that you report to the IRS. You'll need this number to submit for reimbursement. Many FSA plans require you to provide the provider's tax ID before they'll process your claim.

Adult dependent care that qualifies

Adult day care centers, in-home care for an aging parent, and overnight care facilities count if the person is your dependent and the care lets you work. The dependent must live with you for more than half the year and be unable to care for themselves. A parent, grandparent, or other relative can count if they meet these conditions.

Nursing home care qualifies if it's primarily custodial care (help with daily living) rather than medical care. If the facility bills separately for medical services, only the custodial portion can be paid from your FSA. Check with the facility about how they break down their charges.

What you cannot use Dependent Care FSA for

Overnight camps, even day camps that include overnight options, do not count because the primary purpose is not childcare — it's enrichment or education. Tuition at any K-12 school, including private school, is not covered, even if the school provides before- or after-school care. Babysitting for date nights, social events, or personal time does not count because you're not working during those hours.

You also cannot use the money for school supplies, meals, transportation to school, or medical care. If a provider charges a flat rate that includes meals or supplies, you may be able to claim only the portion that covers care, but this requires documentation and varies by plan. Kindergarten tuition is not covered, but a kindergarten program that runs part-time while you work may be covered for the hours you're actually working.

How to get reimbursed from your account

Most employers offer two ways to use the money. The first is to pay the provider yourself and then submit a receipt and claim form to your FSA plan for reimbursement. The second is to authorize the FSA to pay the provider directly — this requires the provider's name, address, and tax ID. Direct payment is simpler because you don't have to wait for reimbursement, but not all providers accept it.

When you submit a claim, you'll need to show proof of payment (a receipt or invoice) and proof that you paid for care while you were working. Some plans ask for a statement from the provider confirming the dates and hours of care. Keep all receipts for at least three years in case the IRS audits your return.

The use-it-or-lose-it rule and how much to set aside

Most Dependent Care FSA plans follow a "use it or lose it" rule: money you don't spend by December 31 does not roll over to the next year. Some employers offer a grace period of up to 2.5 months into the new year to spend the previous year's money, but this is optional. A few plans let you carry over up to $550, but this is rare.

Because of this rule, you need to estimate carefully how much childcare or adult care you'll actually pay for during the year. If you overestimate, you'll lose the unspent money. If you underestimate, you'll pay for some expenses with after-tax dollars. Many people set aside $2,000 to $5,000 per year, but the IRS limit for 2024 is $5,000 per household per year (this limit changes annually). Check your plan documents or your employer's benefits website for the current limit.

Frequently Asked Questions

Can I use Dependent Care FSA money for my child's school tuition?

No. K-12 tuition is never covered, even at private schools. However, if your child's school offers before-school or after-school care programs and you pay separately for those services, that portion may count. The care itself must be the primary service you're paying for, not education.

What if my childcare provider doesn't have a tax ID?

They need one to be paid from your FSA. If they're a nanny or independent provider, they can use their Social Security Number. If they're a daycare center or facility, they should have an Employer Identification Number. Ask your provider for this information before you submit a claim, or contact your FSA plan to ask what documentation they accept.

Do I lose all my FSA money if I don't spend it by year-end?

Usually yes, unless your employer offers a grace period (up to 2.5 months into the new year) or allows a small carryover (up to $550). Check your plan documents or ask your HR department whether your plan has either option. If it doesn't, you'll forfeit any unspent balance on December 31.

Can I use this money for my spouse's dependent care if we're married?

Only if both of you are working or in school. If one spouse stays home, that spouse's care expenses don't count. If you're both working, you can use the FSA to pay for care for any dependent child or adult dependent you both claim on your taxes.

Does overnight camp count as childcare?

No. Overnight camps are considered enrichment or education, not childcare, so they don't may have access to. Day camps may count if the primary purpose is childcare while you work, but overnight components typically disqualify the expense. Ask your FSA plan if you're unsure about a specific program.