The Dependent Care Reimbursement Account (for child care) is another of the tax saving options available to The University of Tennessee employees through the Flexible Benefits Plan. Dependent Care expenses make up a significant part of many family budgets. The tax free Dependent Care Reimbursement Account lets you use tax free dollars to pay for such care if it is necessary to allow you to work and, if you are married, to allow your spouse to work or attend school full-time. (If married, both spouses must be employed unless your spouse is a full-time student for at least five months during the year, or mentally or physically disabled and unable to provide self-care.)

Dependent Care Contribution Limits

Depending upon your circumstances, you can contribute up to $5,000 a year into your Dependent Day Care Reimbursement Account. If you file your income taxes as “head of household,” “single” or “married, filing jointly” you may put the full $5,000 a year into your account. If you are married but file a separate federal income tax return, you may deposit a maximum of $2,500 to your Dependent Day Care Reimbursement Account.

Employees participating in the Dependent Care Reimbursement Account are required by the Internal Revenue Service to complete Part III of Form 2441 or Schedule 2 on your income tax return to claim the exclusion. Expenses reimbursed through this Flexible Benefits Program may not be used as tax credits or deductions on your annual federal income tax return.

Dependent Care Expenses

In order to qualify as eligible expenses, the amounts you spend on dependent day care must meet the following IRS rules:

  • You may be reimbursed for charges for day care services either inside or outside your home for eligible dependents under the age of 13. Services must be for the physical care of the child and must not be provided by a spouse or dependent.
  • You may be reimbursed for charges for the care of a dependent adult or child who is mentally or physically incapable of self care. To be eligible, services may not be provided by a spouse or dependent and the eligible dependent must regularly spend at least eight hours per day in your household.
  • If you use the Dependent Care Reimbursement Account to pay for day care or claim the Child or Dependent Care Tax Credit, you will need to complete Form 2441 when you complete your 1040 tax return (or Schedule 2 for a 1040A tax return).

Dependent Care Expenses that are Not Eligible

The following items are not eligible for reimbursement under the Dependent Care Reimbursement Account:

  • Days you and your spouse are not working – including sick leave, vacation days, or breaks in semesters – or days when you do not meet the eligibility requirements
  • Care provided by your children who are under the age of 19 or by anyone you claim as a dependent on your federal income tax return
  • Transportation, education, clothing, or entertainment
  • Baby-sitting for social events
  • Any additional costs for educational workshops or camps offered by day care centers or schools
  • Overnight camps are generally not allowed, unless the expenses can be divided by the camp into daytime and nighttime portions
  • Kindergarten tuition payments