Hello,
My childcare price point has dropped and I'm putting in more money than I need.
it wouldn't be an issue except that the program is a use it or lose it.
I have looked at the list of ways I spend it but none of them apply besides the actual daycare for my child.
I guess I'm looking for ways I can spend the money meaningfully so it doesn't just vanish on me.
I am putting about 1200 a month into it and may only need half of that now. so that extra 600 is going to turn into about 3600 of unused funds by end of year.
Childcare FSA greater than I need. How to use the money?
byu/salandrews23 inpersonalfinance
Posted by salandrews23
10 Comments
If your child care expense changes you can change how much to contribute each check. Change it to just 1.00 coming out. Do not completely cancel the election.
Check with your employer or DCAP provider, a change in pricing is usually considered a qualifying event that will allow a mid-plan year change to your enrollment. But it does have a deadline to report the change so ask now.
Be sure to check your spending deadline.. my Dependant care FSA knows that most school things are cross year so I have a deadline to spend until March 27 even though deductions stop in December 26.
If you can still spend the 2026 funds in early 2027 then you just need to adjust your next years election to account for the change
If not all of it, at least it could be less to potentially lose.
I’m sorry if I’m totally wrong, but isn’t there a $7500 yearly max for contributions?
I’m with u/Bubbly_Excitement_71 questioning your ability to enroll in about $14k of annual DCFSA contribution. The IRS caps the tax-free benefit of that type of account at $7500 (increased this year). This is per household, not per plan. Are you putting money into two separate job plans, maybe yours + spouse’s? You’d be able to do that, since neither knows about the other. But when reported on your next tax return anything above the $7500 cap ends up as a “taxable benefit” that get added back into your taxable income since it wasn’t included when the contribution came out of a paycheck.
As also mentioned, a change in the amount of your childcare expenses should count as a qualifying event allowing you to change your contribution amount outside of open enrollment. Though IIRC it’s supposed to be within 30 days of the change. On top of reducing it to meet your actual needs, you’d also want to keep your annual amount at/under the $7500 IRS cap. Though I believe a given plan can choose to be more restrictive about accepting a qualifying event than the IRS guidelines. If you are using multiple plans, you can check both to see about making the change, then tweak one/both depending on how accepting they are.
Just contact HR and have them change the deduction?
You can use it to pay babysitters. Also grandparents can count as babysitters
Not sure how you’re contributing that much, but in any event you can use the funds for summer camps. Ask your kid what crazy expensive camp they want and use the overages. Can’t be used for tuition or overnight camps.
Summer camp, after school care and winter vacation all qualify.
It’s been a max of $5000 per year until this year it is now $7500 max. I am having the max withheld which is around $288 per paycheck.