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Dependent Care Advantage Account
What Is The Dependent Care Advantage Account?
Eligibility
Employer Contribution – New Rates for 2006!
What You Need To Know Before Enrolling
How Do I Enroll?
Eligible Expenses
Ineligible Expenses
Changes In Status
DCAAccount Claims Process
Payroll Changes
What To Do At Tax Time
Federal Tax Credit Or DCAAccount?
Dependent Care Advantage Account Worksheet
Dependent Care Advantage Account Forms |
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What Is The Dependent Care Advantage Account?
The Dependent Care Advantage Account (DCAAccount) is a negotiated employee benefit that helps State employee families who have to pay for child care, elder care, or disabled dependent care while they are at work.
The DCAAccount is managed by staff of the Family Benefits Program. The DCAAccount Team consists of staff located in Albany, New York who are specially trained in this employee benefit. They maintain a very active role in the day-to-day administration of the program and serve as the liaison between the FSA Administrator and New York State employees.
Call the FSA Hotline at 1-800-358-7202, then press 2. You will receive expert assistance with questions you may have about the program. For the hearing impaired, this Hotline can be accessed through the New York Relay System.
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Eligibility
Employees who work for the New York State Executive or Legislative Branches, judges, justices and non-judicial employees of the Unified Court System, and employees of Participating Employers are eligible, provided the employee receives a regular, biweekly paycheck from the Office of the State Comptroller. Part-time employees are eligible as long as their biweekly paychecks can support their DCAAccount deduction. Employees of NYSERDA, EFC, and Roswell Park Cancer Institute are also eligible to participate.
New employees are immediately eligible for this benefit, but must enroll within 60 days of their hiring date. The Plan Year contribution amount will then be pro-rated over the remaining pay periods in the calendar year.
Recent changes to the IRS definitions regarding dependents, may affect your DCAAccount reimbursement. Use this information to determine if your expenses are still eligible.
Whose expenses are eligible under the new definition of dependent?
You may use your DCAAccount to receive reimbursement for eligible dependent care expenses for qualifying individuals.
A qualifying individual includes a qualifying child, if he/she:
is a U.S. citizen, national, or a resident of the U.S., Mexico, or Canada, has a specified family-type relationship to you, lives in your household for more than half of the taxable year, is 12 years old or younger; and has not provided more than one-half of their own support during the taxable year.
A qualifying individual includes your spouse, if he/she: is physically and/or mentally incapable of self care, lives in your household for more than half of the taxable year, and spends at least eight hours per day in your home.
A qualifying individual includes your qualifying relative, if he/she: is a U.S. citizen, national, or a resident of the U.S., Mexico, or Canada, is physically and/or mentally incapable of self care, lives in your household for more than half of the taxable year, spends at least eight hours per day in your home, has a gross income less than the taxable year exemption amount ($3,200 for 2005), and receives more than one-half of their support from you during the taxable year.
Note: If you are a tax dependent of another person, you cannot claim qualifying individuals for yourself. You cannot claim a qualifying individual if he/she files a joint tax return with his/her spouse. Only the custodial parent of divorced or legally-separated parents can be reimbursed using the DCAAccount.
Employer Contribution – New Rates for 2006!
The Employer Contribution will provide up to $700 for employees in eligible bargaining units who enroll in the DCAAccount. The Employer Contribution is based on salary and is available to Executive Branch State employees who are M/C or represented by CSEA, PEF, UUP, GSEU, DC-37, or are employed by the Legislature. The new 2006 Employer Contribution rates are:
| IF YOUR SALARY IS... |
THE EMPLOYER CONTRIBUTION IS... |
| OVER $70,000 |
$200 |
| $60,001 - $ 70,000 |
$300 |
| $50,001 - $60,000 |
$400 |
| $40,001 - 50,000 |
$500 |
| $30,001 - 40,000 |
$600 |
| Up to $30,000 |
$700 |
| GSEU Employees only (regardless of salary) | $500 |
If you work less than full time, your Employer Contribution will be based on your annualized salary rather than your reduced salary.
You may decide to enroll in the DCAAccount for your full cost of care, up to the $5,000 maximum allowable by law, or for just the amount of the Employer Contribution. If both you and your spouse are State employees and are M/C or represented by one of the public employee unions noted above, you could both receive the Employer Contribution by enrolling separately in the DCAAccount.
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What You Need To Know Before Enrolling
The maximum you may put into the account is $5,000, including any Employer Contribution for which you may be eligible. But, if you or your spouse earn less than $5,000 annually, you cannot put more money into the account than your income or your spouse's income-whichever is less.
The IRS $5,000 maximum contribution rule is applied to households. That is, if both you and your spouse are eligible to participate in the DCAAccount (or a similar program offered by another employer), the total household contribution is limited to $5,000. If you are married and use the "Married Filing Separately" tax filing status, the IRS limits contributions to $2,500 for each spouse. The $2,500 maximum also applies to individuals who file "Single, Not Head of Household" and to individuals who use the "Married Filing Jointly" tax filing status, but have a disabled spouse.
Expenses must be for services provided from January 1 through December 31 of the Plan Year.
If the services are for child care, your child must be under 13 years old and must be your dependent as defined by federal tax rules. But, the services may be provided for a child or adult of any age if he or she is disabled and unable to care for her/himself and spends at least eight hours of the day in your home.
The services may be provided either in your home or elsewhere, but not by someone whom you also claim as your dependent for income tax purposes. For example, you may not pay your older child to care for your younger child or elderly parent.
The IRS requires you to provide the name, address, and taxpayer identification number (or social security number) of the person providing the care. You must provide this information when you submit a reimbursement request form and when you file IRS Form 2441 with your income tax return (or Form 1040A Schedule 2 Child and Dependent Care Expenses for Form 1040A Filers).
Any funds that you do not claim for reimbursement are forfeited at the end of the Plan Year and will be used to offset the costs of administering the program. The IRS prohibits these funds from being returned to individual plan participants.
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How Do I Enroll?
You may enroll in the DCAAccount each fall during the open enrollment period. The 2006 Open Enrollment Campaign begins September 26, 2005 and concludes November 10, 2005.
- Use the DCAAccount Worksheet on this web site to help you estimate what your dependent care expenses will be for the 2006 calendar year. The DCAAcount Tax Calculator will help you figure out if the DCAAccount will save you more money than the Federal and State Child and Dependent Care Tax Credits.
- Based on your estimated expenses, decide how much of your salary you want to set aside in your DCAAccount. If you are eligible for an Employer Contribution, be sure to follow the online instructions carefully. Each pay period, a regular portion of the amount you decide upon is taken out of your biweekly paycheck through automatic payroll deduction. The number of payroll deductions will be based on the number of paychecks you expect to receive during the year and will be made before your state, federal, and social security (and New York City, if applicable) taxes are calculated.
If you are enrolling just for the amount of the Employer Contribution, your DCAAccount will be fully funded by New York State, and no payroll deductions will be taken from your paycheck.
- You can enroll in the DCAAccount online. Select "Apply Now" from the menu and follow the simple instructions on the page. Indicate the amount of your contribution for the 2006 Plan Year, including the amount of your Employer Contribution, if eligible. Once you complete the online enrollment application, click the "Submit My Application" button and you are done. The process is quick, easy, and secure. Be sure to print a copy of your application for your records.
If you do not have internet access, you can enroll by simply calling the FSA Administrator at 1-800-358-7202. A Customer Service Representative will ask you all the information needed for your enrollment application. Once you apply, a notification of your enrollment information for the 2006 Plan Year will be sent to you.
- Sign and return the notification form in order to complete your application. If you do not sign and return this notification form, you will not be enrolled for 2006.
Remember, your enrollment application must be submitted either online or via telephone during the open enrollment period for the new Plan Year.
The online and telephone application process automatically shuts down at the end of the open enrollment period.
- If you are already in the DCAAccount, you must submit a new enrollment application during the open enrollment period to continue your participation in 2006. Re-enrollment is not automatic.
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Eligible Expenses
To use the DCAAccount, you must be paying for dependent care so that you and your spouse (if you are married) can work or go to school. If your spouse is not disabled, not at work, or not in school, it is assumed he or she is available to care for the dependent.
DCAAccount Eligible Expenses
Child care center
Adult day care
Family day care provider
Home aide
Housekeeper or cook
(who also provides
custodial care) |
Baby sitter
Summer day camp
Before/After school
programs
Pre-school programs
Nursery school
Au pair |
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Ineligible Expenses
The following items are not reimbursable expenses from your DCAAccount:
Supplies
Insurance fees
College tuition
Activity fees
Tuition (kindergarten & up)
Meals
Piano, ballet, art lessons, etc.
Diaper service
Medical expenses |
Books
Transportation fees (unless provided by the caregiver)
Deposits
Registration fees
Sleep over camp
T-shirts
Residential nursing home |
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Changes In Status
Once enrolled in the DCAAccount, you may not change your mind. Your pre-tax deductions will continue throughout the calendar year. However, there are certain circumstances where a change may be permitted. Here are some examples of eligible changes in status:
- Marriage
- Divorce or separation
- Death (spouse/dependent)
- Birth or adoption of a child
- Beginning or end of employment (employee or spouse)
- Dependent disability
- From full-time to part-time employment or vice versa (employee or spouse)
- Beginning of or return from leave of absence (employee or spouse)
- Change in work schedule (employee or spouse)
- Change in custody of dependent
- Change in rate paid
- Change in care provider
- Dependent reaches age 13
If you have a change in status, you must submit the change in status application (PDF) (ONLINE VERSION) within 60 days of the qualifying event, but as promptly as possible to prevent unwanted, non-refundable deductions. However, no change in status application can be processed for your account, whether starting a new account, changing an existing one, or terminating, until the date of the change in status has elapsed. Any change in your DCAAccount contributions must be consistent with the change in status. For example, if your child care provider raises fees, you may increase your DCAAccount contributions. No additional documentation or verification of the eligible event is required. It is your responsibility to keep legal documentation of the changes in your personal records in case the IRS audits you.
If you are starting an account after the Plan Year has begun with an eligible change in status, your expenses will be eligible for reimbursement from the date your application is received, or the date of your change in status, whichever is later, through December 31. Change in status (PDF) (ONLINE VERSION) applications will be accepted during the Plan Year until November 15. Forms received after that date cannot be processed in time for the last pay period of the year.
If you change your election during the year, please remember that the Employer Contribution is a one-time annual amount given to eligible employees when they first open a DCAAccount for the Plan Year.
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DCAAccount Claims Process
How do I file a claim for dependent care expenses?
It's easy to submit a claim for reimbursement from your DCAAccount.
- Fill out a reimbursement request form (PDF) after services have been provided.
- Mail or fax it to the FSA Administrator with the invoice or receipt.
- Or, you may find it easier to have your care provider countersign the claim form-then you do not need to attach an invoice or receipt.
- Submit reimbursement request forms as often as you like. Many participants submit biweekly, others submit on a monthly basis, and some submit just once a year. It's up to you.
The reimbursement request form must include the provider's name, address, and taxpayer ID number (or social security number), the period during which the services were provided, and the amount you were charged. Attach a receipt or invoice to the reimbursement request form. Or you can use the form as a receipt, if your provider countersigns the form with you.
Claims for services you have to pay for ahead of time (like summer day camp) cannot be reimbursed until the services have been provided. You can prorate this large expense as the services are rendered, however, and submit claims on a biweekly or monthly basis until you are fully reimbursed.
When the Plan Year ends on December 31, you still have 90 days to send in a claim form for expenses you had during the Plan Year. So, you have until March 31 to submit claims for services rendered from January 1 through December 31 of the preceding year.
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When will I be reimbursed?
The FSA Administrator will review your reimbursement request form and, if it is complete, authorize it for payment up to the amount of money accumulated in your account.
If you submit a receipt for more money than you have in your DCAAccount, the balance will be paid automatically when the funds are deposited from your next payroll deduction.
You will receive a reimbursement check once your claim is approved. Or you can Enter the RACE (PDF) for direct deposit of your reimbursements into your checking or savings account.
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Payroll Changes
Terminations
Your deductions will automatically stop if you leave State payroll. If you return to the New York State payroll, you have 60 days from your return to renew your enrollment.
Leave With Pay
Payroll deductions will continue for participants on sick leave, vacation, and sick leave at half-pay, provided there are sufficient funds in the paycheck. Deductions will not continue for employees receiving short or long-term disability benefits through the Income Protection Plan (IPP).
Some of these situations may be considered eligible changes in status. If you have a question about your situation, contact the DCAAccount Team in Albany. We will help you determine whether a termination of participation or adjustment in the amount of deduction may be required. Use the FSA Hotline at 1-800-358-7202, then press 2.
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What To Do At Tax Time
Your DCAAccount contributions will be reflected in Box 10 of your W-2 Form for 2006. Therefore, it is important that you file the appropriate forms with your income tax returns. If you do not, the IRS is likely to audit your tax return.
- File IRS Form 2441 for Child and Dependent Care Expenses, Part I and Part III, with your federal income tax return. Part I requests information on the persons or organizations providing care, including their social
security or federal identification number. Part III determines the amount
of dependent care benefits that are eligible for tax exclusion. (Form 1040A
filers will file Form 1040A Schedule 2 Child and Dependent Care Expenses.
If you enrolled in the DCAAccount just for the amount of the Employer Contribution, you must still file IRS Form 2441 (or Form 1040A Schedule 2 Child and Dependent Care Expenses for Form 1040A filers).
- If you use an au pair who is not a U.S. citizen, you should file a SS 5 application form requesting a Social Security Identification Number for the au pair. This form is available from the Social Security Administration (1-800-772-1213). At the end of the tax year, the au pair should file an IRS 1040NR (Non-Resident Taxpayer) form. This form indicates wages paid to the non-resident during the tax year.
- If you have an employer/employee relationship with your care provider, you are responsible for paying any applicable taxes and/or insurances on wages paid to the care provider. The wages and applicable taxes and/or insurances are considered expenses eligible for reimbursement.
Please consult your tax preparer, tax attorney or accountant if you have any questions regarding your filing requirements.
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Federal Tax Credit Or DCAAccount?
We encourage you to use the online calculator to help you decide whether to use the Federal and State Tax Credits or the DCAAccount, or a combination of both to maximize your savings. As a result of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), effective in January 2003, the IRS raised the maximum allowable expenses for the Federal Tax Credit from $2,400 to $3,000 for one qualifying dependent and from $4,800 to $6,000 for two or more dependents.
These and other changes in the federal tax law may affect your potential DCAAccount savings. Your decision will depend on a number of factors such as your tax filing status (e.g., married, single, head of household), number of qualifying dependents, amount of dependent care expenses, earned income, etc.
If your family qualifies for the Federal Earned Income Tax Credit (EITC), participation in the DCAAccount, the HCSAccount, or both, may increase your EITC. Consult your tax advisor or the IRS for additional information.
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