What are the limits on DCFSA from the tax and rules standpoint?
I understand her and I are both eligible for an employer 100% match up to $2500 each but in reading about the taxes of it we're only allowed up to $5000. We work for separate employers.
So would we be able to both get the full employer match individually but one of us would have to pay taxes on our match and the money we put in as income? Or is that to say that only one of us can get the full match and that as a family we are limited to $5000 total (2500 paid and 2500 matched). Thanks.
DCFSA for unmarried parents in the same household
byu/astronautspants intax
Posted by astronautspants
2 Comments
How many kids do you have?
The DCFSA limit is per tax household (with special rules for married filing separately). So as unmarried parents, you could theoretically defer $10,000 between the two of you. However, the dependent in question needs to be claimed on your tax return to keep the income tax free. So if you only have one kid, you’re effectively limited to one DCFSA account.
(Also note, the DCFSA limit is being increased to $7500 beginning in 2026.)
Only one person is allowed to claim the child / dependent care expenses, the other person will have to pay taxes on any FSA child care contributions or match.
Its hard to imagine that your employer does not have eligibility requirements, but if they don’t require you to be eligible and are actually giving you a 100% match then its worth it to pay the taxes for that free money.