Kelly Linden, CPA has the scoop on this helpful tax benefit:
It’s not easy juggling all of the responsibilities of today’s working adult, especially if you’re a caretaker for children and family members. Mental and physical strain aside, financial resources can take a hit as well. However, dependent care benefits can help!
Dependent care benefits are a wonderful advantage for those who are responsible for children, elderly parents, or other individuals. These benefits are part of an overall employee benefits plan, and they allow you to use pre-tax dollars to pay for care for your child (under age 13), parent, or a disabled dependent. These expenses for can take a burden off of the caretaker, allowing you and your spouse to work, look for work, or go to school full time.
This is an excellent advantage, but there are a few exceptions. If your spouse is a stay-at-home parent, you cannot participate. In addition, these Dependent Care Benefits cannot be used for private tuition expenses; however, before- and after-care for children while you are in school may qualify. The maximum tax-free amount allowed by IRS is $5000, or $2,500 if you are married and filing separately from your spouse.
While it’s not always easy being responsible for children and family members, Dependent Care Benefits can be a major asset. If you need help figuring out how to make them work for you, give us a call.