To be able to work every day, many of your employees likely rely on day care or home aide services to care for their loved ones. Help lessen the financial burden of these services, while realizing major tax savings, when you offer your employees use of a dependent care account (DCA). 

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By allowing employees to set aside pre-tax dollars, these accounts can help pay for costs associated with the daily care of an eligible child, elderly parent, or other dependents that are unable to care for themselves. And since the money is deducted pre-tax, the taxable income of those who participate is reduced -- providing you with a lessened payroll, and a decrease in taxes paid. 

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What expenses are eligible?

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Eligible expenses include:

• Day care

• Before and after school programs

• Babysitting in your home by someone who is not your dependent

• Care for a dependent adult (eldercare)

• Nanny, nursery school, or pre-school expenses

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DCAs can NOT be used for the following expenses: 

• Expenses not directly related to custodial care, such as administrative fees, supply fees, food/meals, entertainment, etc.

• Education tuition for grades Kindergarten and above

• Overnight camp

• Custodial care that is not for the express purpose of allowing the employee to work (e.g., babysitting while the employee goes out to dinner)