A man and woman holding hands with a child using the benefits of the Army dependent care flexible spending account or Army DCFSA to establish Army dependent care tax-based incentives.
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Military Benefit: Your Guide to the Army Dependent Care Flexible Spending Account

ByArmyConnect™ Reading Time: 7 minutes

Save Money with the Army Dependent Care Flexible Spending Account (DCFSA)

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As a friendly reminder: TRICARE’s 2023 Open Season begins November 13 and ends December 12, 2023. Are you taking full advantage of the benefits Army Dependent Care Flexible Spending Accounts offers? If not, you’re missing out on a valuable opportunity to save money on your healthcare expenses. In this comprehensive guide, we’ll explore the ins and outs of Army DCFSAs, helping you understand how to maximize the benefits and stretch every dollar.

  • What is the Army’s Dependent Care Flexible Spending Account?
  • Who Is Eligible to Enroll in the Army DCFSA?
  • What Are the Contribution Limits for The DCFSA?
  • Are Dependent Care Expenses Paid with A DCFSA Tax Deductible?
  • What Information Do I Need to Obtain from A Dependent Care Provider?
  • What Expenses Can Be Covered by The Army DCFSA?
  • Do’s and Don’ts for Receipts
  • Tips For Maximizing Your DCFSA Benefits
  • How Does the Army DCFSA Benefit Service Members in Comparison to Other Options?
  • Conclusion: Making the most of your Army DCFSA

With the rising costs of childcare and other family support services, having a DCFSA can be a game-changer for your budget. But navigating the intricacies of these accounts can be overwhelming. That’s where this guide comes in.

We’ll walk you through the basics of an Army DCFSA, including eligibility requirements and contribution limits. We will provide links to where you can set up and manage your account and discover tips and strategies to make the most out of your funds. Furthermore, we’ll shed light on eligible expenses, ensuring you comply with IRS regulations.

By the end of this guide, you’ll have the knowledge and tools to take full advantage of the Army Dependent Care Flexible Spending Account provided by , saving money while receiving essential money-saving support on expenses.

What is the Army’s Dependent Care Flexible Spending Account?

The Dependent Care Flexible Spending Account (DCFSA) is a type of tax-advantaged account authorized under Executive Order 14100, “Advancing Economic Security for Military and Veteran Spouses, Military Caregivers, and Survivors,” that allows you to set aside pre-tax dollars to pay for qualified dependent expenses.

The DCFSA allows service members to contribute pre-tax income to cover dependent care expenses, providing financial relief for childcare costs. This article will outline why service members should consider enrolling in the Army DCFSA and provide essential information about the enrollment process, eligible expenses, and deadlines.

Who Is Eligible to Enroll in the Army DCFSA?

“Enrollment in the program is open to all active component service members and Active Guard Reserve members on Title 10 orders. All active component service members and Active Guard Reserve members on Title 10 orders are eligible to enroll in the TRICARE DCFSA, allowing them to alleviate the financial strain of dependent care expenses (U.S. Department of Defense 2023).”

What Are the Contribution Limits for The DCFSA?

Service members can contribute up to $5,000 per family per year in pre-tax income to pay for dependent care expenses ($2,500 if married filing separate tax returns). The contribution limits for the DCFSA allow service members to allocate a significant amount of pre-tax income towards eligible dependent care expenses, providing substantial financial relief.

Are Dependent Care Expenses Paid with A DCFSA Tax Deductible?

“You cannot claim the same expenses on your federal income taxes and Dependent Care FSA (DCFSA). However, in certain situations, you may be able to take advantage of both the DCFSA and the Child and Dependent Care Tax Credit (U.S. Office of Personnel Management 2023).”

DCFSA Federal Tax Credit
One Dependent $5,000 $3,000
Two or More Dependents $5,000 $6,000

What Information Do I Need to Obtain from A Dependent Care Provider?

“The caregiver must declare your payment as taxable income. If it is a childcare center providing care for more than six non-resident children, the provider must comply with state and local regulations (U.S. Office of Personnel Management 2023).”

A green toy car on a wooden floor in a daycare alluding to the Army dependent care flexible spending account or Army DCFSA. Which provides tax incentives for Army dependent care.

What Expenses Can Be Covered by The Army DCFSA?

Soldiers can use the Army Dependent Care Flexible Spending Account to pay various eligible dependent care expenses. Qualifying expenses include care for tax dependents who are children under 13 and care for a spouse or other tax dependent (regardless of age) who is mentally or physically incapable of self-care. Understanding the specific qualifying expenses for the DCFSA is essential for service members to make informed decisions about enrolling and utilizing the program’s benefits. This service covers a range of eligible expenses listed below (U.S. Office of Personnel Management 2023).

  • Care for your dependent who is underage 13.
    • Activities in lieu of daycare when the fees associated with the activity are incidental to, or cannot be separated from, the cost of care (swimming lessons, arts and crafts, music lessons, etc.)
    • Before and after-school care (other than tuition expenses)
    • Babysitting and nanny expenses
    • Childcare at a day camp, nursery school, or by a private sitter
    • Daycare, nursery school, and preschool
    • Expenses for a housekeeper whose duties include caring for an eligible dependent
    • Late pick-up fees
    • Placement or program fees for a dependent care provider, such as an au pair (see the FAQ in this section about au pairs for more information)
    • Sick Childcare
    • Summer or holiday day camps, including registration fees
  • Care for your spouse or a relative who is physically or mentally incapable of self-care and lives in your home.
    • Adult Day Care
    • Dependent or elder care (while you work, to enable you to work or look for work)
    • Senior Day Care

It’s important to note that not all expenses are eligible for reimbursement, and always keep your receipt. We’ve provided a list below of most of the expenses. Still, it’s always a good idea to check with your FSA administrator or refer to the IRS guidelines to ensure your costs are eligible for reimbursement.

Do’s and Don’ts for Receipts

  • DO use your insurance carrier’s Explanation of Benefits (EOB) statement for health care receipts, especially if your insurance paid a portion of the expense.
  • DO make sure your receipt is legible; check that it isn’t too dark or light and that information is not cut off.
  • DO include stamped provider information on handwritten receipts.
  • DON’T send credit card receipts, canceled checks, or balance forward statements, as they typically do not include all five critical pieces of information.
  • DON’T use highlighters on your receipts.

What Is the Deadline for Incurring Eligible Expenses and Submitting Claims?

Service members enrolled in a DCFSA have until March 15 of the following year to incur eligible expenses, with claims for costs incurred to be submitted by April 30, the deadline for submitting claims from the previous plan year. Understanding the deadlines for incurring eligible expenses and submitting claims is crucial for maximizing the benefits of the Army DCFSA and avoiding forfeiture of remaining funds.

Tips For Maximizing Your DCFSA Benefits

Here are some tips to help you make the most out of your DCFSA:

  1. Estimate your healthcare expenses: Before enrolling in an Army DCFSA, take the time to estimate your costs for the upcoming year. This will help you determine an appropriate contribution amount, ensuring you don’t contribute more than you need.
  2. Keep track of your expenses: It’s essential to keep detailed records of your dependent expenses throughout the year. This will make it easier to request reimbursement or verify your DCFSA balance.

Plan for future expenses: If you have upcoming medical procedures or surgeries, consider increasing your DCFSA contributions to cover these expenses. This can help alleviate the financial burden and reduce your out-of-pocket costs.

How Does the Army DCFSA Benefit Service Members in Comparison to Other Options?

DCFSAs are already available to the department’s civilian employees, offering service members a comparable benefit to their civilian counterparts. Service members can benefit from enrolling in the DCFSA by accessing a benefit that is on par with what is available to the department’s civilian employees, providing them with a valuable financial resource for dependent care expenses.

How Do I Save on Taxes With The Dependent Care Flexible Spending Account?

When you use the DCFSA you have the chance to lower your overall tax bill by reducing your taxable income. For example, if your annual pay is $40,000 and you contribute $5,000 to a DCFSA, you pay taxes on $35,000. This lower amount may reduce your tax bill (Military OneSource 2023).

Conclusion: Making the most of your Army DCFSA

Enrolling in the Army Dependent Care Flexible Spending Account offers a range of benefits for service members, including the ability to contribute pre-tax income towards dependent care expenses, thereby reducing the financial burden of childcare costs. By understanding the contribution limits, eligible expenses, enrollment eligibility, and deadlines, service members can make informed decisions about enrolling in the DCFSA and maximizing its benefits.

DCFSAs are already available to the department’s civilian employees, offering service members a comparable benefit to their civilian counterparts. Service members can benefit from enrolling in the Army DCFSA by accessing a benefit that is on par with what is available to the department’s civilian employees, providing them with a valuable financial resource for dependent care expenses.

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