Benefits Handbook

See the Participating in Spending Accounts section for more information about taxes.

For most individuals, participating in a Dependent Care Flexible Spending Account will produce the greater federal tax savings, but there are some for whom the opposite is true. (And in some cases, the federal tax savings from participating in a Dependent Care Flexible Spending Account will be only marginally better.) Because the preferable method for treating benefits payments depends on certain factors, such as your tax filing status (e.g., married, single, head of household), number of qualifying individuals, earned income, etc., you will have to determine your tax position individually in order to make the decision. Use IRS Form 2441 ("Child and Dependent Care Expenses") to help make this determination.

Also note that a tax credit is a dollar-for-dollar reduction in the amount of tax due, whereas pre-tax contributions to a Dependent Care Flexible Spending Account are subtracted from gross income, on which income tax is calculated.

You should consult a professional tax advisor for further information.

No. If you are reimbursed for an eligible expense from the Plan, you can not claim it as a credit on your federal income tax return.