Using a Dependent Care FSA to Pay for Preschool

[OrionGrad]

Has anyone used a Dependent Care FSA to pay for preschool expenses? I didn't even know this was an option until now. Just curious if there are any downsides, or if there are any other reasons we may want to re-think it. From the looks of it, it seems like paying for preschool with pre-tax dollars could save us a couple thousand next year.

[SoonerTexan]

I used to to pay for our nanny one year, though if the hospital hadn't kicked $1000 into the fund as a perk, I'm pretty sure it would have been a wash since we couldn't use the childcare tax credit.

[Thirteen]

Has anyone used a Dependent Care FSA to pay for preschool expenses? I didn't even know this was an option until now. Just curious if there are any downsides, or if there are any other reasons we may want to re-think it. From the looks of it, it seems like paying for preschool with pre-tax dollars could save us a couple thousand next year.

Yes!
It didn't take away from our total balance, because there was a secondary "account" in the FSA solely for Dep Care. We received up to $300/month, so it completely covered his first year. His second year was more, so I would pay the remainder with my CC.


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[OrionGrad]

[MENTION=1497]Thirteen[/MENTION] [MENTION=1889]SoonerTexan[/MENTION] Will it be a problem if we can't pay the preschool with a cc (check only)? How does the reimbursement work? Do I fill out forms for the FSA each month and mail the receipt/invoice in, then they send me a check for reimbursement? I realize some of this might be plan-dependent...

[SoonerTexan]

For us, we just had to submit a form every time we wanted a reimbursement (up to us) to the company administering the plan with the amount of hours our nanny worked (she had to sign it as well). For preschool, I assume you'd submit some form of receipt from the school to them?.

The big downside is the "use it or lose it" aspect, but I'm guessing you know that.

[fluffhead]

We always maxed the dependent care for preschool. I had the school cut me a receipt each time I paid them - I gave them all the information we needed and made sure they wrote dates of service ending on the date I was submitting the receipt.
At the time, I had the procedure down pretty well. Now, when it comes to camps, I'm much more disorganized.

[Howfunitis]

Can someone explain this further to me?


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[SoonerTexan]

Can someone explain this further to me?

I think it only applies if both parents are working. if I remember correctly [MENTION=1924]OrionGrad[/MENTION] is still freelancing. Have you checked out the preschool options in OK, though? I don't know the details, but they are supposed to (randomly) be the only state with free universal Pre-K

[fluffhead]

It looks quite complicated regarding self-employment, or I assume 1099 work. Still, I'd think you can deduct up to the level of earned income.

[Howfunitis]

[MENTION=1889]SoonerTexan[/MENTION] have no clue where to even start looking. Everyone I've asked is taking their kids to a moms day out at church or something like that. I don't even know when to start looking at school. She will be 3 this month.


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[OrionGrad]

[MENTION=4964]Howfunitis[/MENTION] On Page 15 of this IRS booklet it defines who qualifies for a Dependent Care FSA. It says you can use it for care that was provided "so you (and your spouse if filing jointly) could work or look for work." As long as you have any earned income for the year, I *think* you can take at least some of the credit or the exclusion. (Of course, you should talk to a tax professional before making any real decisions. ��)

https://www.irs.gov/pub/irs-pdf/i244...786.1481126761

[SoonerTexan]

@Howfunitis Here is it. Starts at 4 though. Might try looking at the link about it--something about a pilot program?

http://sde.ok.gov/sde/early-childhoo...ation#EC/Pilot

Also maybe this:

http://captulsa.org/families/early-childhood-education/