Do your families sometimes struggle to be able to afford your tuition? Whether it’s inflation or other budget demands, it can be a challenge for parents to find the extra dollars to meet the cost of your quality care. Here’s something you can do that might help retain current families and enroll new ones.
Ask them if they know if their employer offers employees a Dependent Care Flexible Savings Account. If so, it can definitely help the family save money to put toward childcare.
To take a closer look at FSAs, guest bloggers Courtney McGann, Demand Generation Specialist, and Leah Woodbury, Head of Content at Procare Solutions, offer this overview to help you become a more knowledgeable resource on this topic
What Is a Dependent Care FSA?
A dependent care flexible spending account (FSA) is a pre-tax benefit account that is used to pay for eligible dependent care services such as preschool, before and after school programs, day camps, as well as child or adult daycare.
A certain amount of money is deducted from your paycheck and deposited in the FSA, and you withdraw from it to pay for care of those who depend on you.
For childcare, the money from the dependent care FSA can be used for the care of those 13 years old and younger. Expenses typically not covered include activity fees, field trips, diapers, tutoring and meals. And tuition for kindergarten or private schools is not a qualifying expense either. That’s because the IRS says that is an educational expense, rather than a childcare expense.
What Paperwork Needs to be Submitted?
Keep your receipts! Employees using a Dependent Care FSA typically will be asked to attach an itemized receipt each time they make a withdrawal from their Dependent Care FSA. Information that is required includes the tax ID of the childcare provider, the tuition amount, the names of the children served as well as dates the care was provided. Usually, this information can be submitted online for reimbursement requests. Note: credit card receipts, canceled checks and balance forward statements are not considered acceptable documentation.
How Much Can an Employee Contribute?
For 2023, the maximum amount that can be contributed to a dependent care account remains at $2,500 for those who are married and filing separately, and at $5,000 for those who single or married filing jointly.
Can Employees Change How Much They Contribute Outside Open Enrollment?
This is a good question for your parents to ask a person in their company’s human resources department. Typically, FSA contribution amounts cannot be changed midyear. However, if a family has a “qualifying event”, such as the birth of a new child, there may be exceptions. Encourage your parents to reach out to their company’s benefits coordinator to make sure they are allocating the amount of money that best suits the needs of their family.
Learn more and download the free eBook on managing childcare center financials: https://procare.solutions/child-care-financials-ebook
A big thank you to Courtney and Leah for specifics on this source of dollars that can be allocated to childcare. Encouraging your families to investigate Dependent Care FSAs with their employers can help them financially and makes you a valuable resource who cares.