The employee can treat the full $1,500/month payment to the nanny as a work-related dependent care FSA expense even though the nanny provides other non-qualifying services for the employee. The nanny also is responsible for overseeing the employee’s 15-year old child while the employee and spouse are at work.Īs part of the nanny’s duties, the nanny also regularly spends 30 minutes per day driving the employee to and from work. However, employees do not need to divide the expenses if the other non-qualifying care functions are only a small part of the nanny’s services.Įmployee pays a nanny $1,500/month to take care of her 9-year old child at home so the employee and spouse can work. Where a nanny’s services are split between caring for children under age 13 and other non-qualifying care functions (e.g., maintaining other aspects of the house), only those qualifying care-related expenses are reimbursable by the dependent care FSA. Household Services: Nanny, Au Pair, or Housekeeper Cares for Children Under Age 13Įmployees can use the dependent care FSA to pay for a nanny, au pair, housekeeper, or other similar arrangement where the service provider cares for their children under age 13 to enable both the employee and the spouse to be gainfully employed. The underlying requirement to qualify as “care” is simply that the main purpose is the person’s well-being and protection. “Care” in this context be provided in a variety of different arrangements and places, including inside and outside the home. General Rule: Dependent Care Expenses Must be for “Care”Įmployees’ dependent care expenses are eligible for reimbursement under the dependent care FSA only if the expenses are “employment-related,” which means they enable the employee and spouse to be gainfully employed by providing “care” to a qualifying individual. However, there are several important limitations and potential employment tax consequences for employees to take into consideration.įor more details on the increased $10,500 2021 contribution limit added by the American Rescue Plan Act (APRA), see: Dependent Care FSA Increase Passes Congress. Short Answer: Employees generally can use the dependent care FSA to pay for employment-related daycare services provided in-home by a nanny, relative, or other similar arrangement. Question: Can employees use the dependent care FSA to pay for a nanny or relative to take care of a child at home?
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