This week’s question comes from Brent, an HR Director. I read about employees being reimbursed through a dependent care flexible spending arrangement (FSA) for summer camp costs and need more information. What are the tests for reimbursement of expenses by a dependent care FSA? Answer: Plans may have different forms that must be completed to receive reimbursement, but the expenses themselves must be qualifying expenses to be eligible for reimbursement.
Test for Qualifying Expenses
To be eligible for reimbursement under a dependent care FSA, an employee must meet all of the following tests:
- Qualifying Person: The care must be for one or more qualifying persons.
- Earned Income: The employee (and spouse, if filing jointly) generally must have earned income during the year.
- Work-Related Expense: The employee must pay child and dependent care expenses so that the employee (and spouse, if filing jointly) can work or look for work.
- Care Provider: The employee must make payments to someone the employee (and spouse, if filing jointly) cannot claim as a dependent. If paid to a child of the employee, the child must also be age 19 or older by the end of the year. Payments cannot be made to:
- The employee’s spouse, or
- The parent of the employee’s qualifying person if the qualifying person is the employee’s child and under age 13.
- Filing Status: The employee’s filing status must be single, head of household, qualifying widow or widower with dependent child, or married filing jointly. Married employees must generally file a joint return.
- Provider Identification: The employee must identify the care provider on the employee’s income tax return.
Contact Vision Payroll Today
Contact Vision Payroll for further information on the tests for reimbursement of expenses by a dependent care FSA.