Charlie Marlow
Did you know that military members can save on their taxes by participating in the Dependent Care Flexible Spending Account (DCFSA)? Military members are eligible to set a portion of their paycheck aside in the FSA to pay dependent care expenses like day care, preschool, before and/or after school care, summer day camps for dependents under 13 or adult care for a spouse that is physically or mentally incapable of self-care and lives in your home. Members of the regular active component and reserve component performing active Guard and reserve duty under 10 USC 12301(d) are eligible to participate. Deductions to the DCFSA are deducted before taxes are computed meaning you are paying for expenses with pretax dollars, effectively reducing your out-of-pocket cost by up to 30% or more and helps you budget for known dependent care expenses.
How it works:
- Members can sign up on FSAFEDS during the open enrollment season running from mid-November to mid-December. Select an amount to be deducted from your pay and the funds will be placed in your account. You can then arrange for payments to be sent directly to your provider or reimburse yourself for expenses incurred. Your account is easily managed using the online tools.
- Members can contribute up to $5,000 per year ($2,500 if married filing separate). Deductions reduce your taxable income, so if you make $48,000 per year and contribute $5,000 to your DCFSA your taxable income will be only $43,000.
- Members participating should be cautious and make sure to carefully estimate their expenses as funds withheld but not used are lost.
Learn more about the plan on the FSAFEDS site, which is full of educational information, FAQs, savings calculators to help you determine how much you can save, and links to sign up and manage your account.
Find Out More with MyMilitarySavings.com and Finance!
Lasonja Williams
