Dependent Care Costs? DCFSA May Help!

by Katie Casey-Macias, CFP® on Thursday October 19, 2023
Posted in Category: Budgeting
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Teacher giving a lesson to nursery students.

Balancing family life with military life is a major task, often requiring support from dependent care providers. If you’re covering the cost of care for your loved ones, you already know the financial burden on your budget. The good news is that a new account, called a Dependent Care Flexible Spending Account (DCFSA), is available for military families, which can help ease some of the financial pressure associated with care costs.


A DCFSA is a pretax account that allows Service members to set aside a portion of their pay to cover eligible dependent care services including preschool, day camp, before or after-school programs, and child or adult daycare. The major benefit of the DCFSA is potential tax-savings because it enables you to pay for qualified expenses (like the ones mentioned above) with pretax dollars. This is accomplished by making contributions to your DCFSA, which reduces your taxable income and potentially lowers your overall tax liability.

Let’s cover the program basics.

  • Eligibility and Enrollment: You must be on active duty or a Reserve member on Title 10 orders, have one or more eligible dependents, and incur qualifying expenses that allow you and your spouse (if you’re married) to work, seek employment, or go to school full-time. Enrollment is required annually and can be done during Federal Open Season (mid-November to mid-December) for the following calendar year, also called the plan year. You can also enroll after a qualifying life event like the birth or adoption of a child, a divorce, or a PCS.
  • Pretax Contributions: Funds are withheld each pay period and deposited into your account. You decide the contribution amount and frequency. Your contribution limit depends upon your tax-filing status; the minimum contribution amount is $100 and the maximum is $5,000 per household per year. Plan your contributions based on your expected dependent care expenses for the upcoming year. Note that contributing to your DCFSA will reduce your take-home pay, so make sure to review and adjust your budget.
  • Claims and Reimbursement: You can use your DCFSA to pay care providers directly or reimburse out-of-pocket expenses. A grace period to incur expenses extends until March 15th following the plan year to use any remaining funds. All claims must be submitted by April 30th following the plan year. DCFSA is subject to the “use it or lose it” rule, meaning any unclaimed contributions left in your account after April 30th are forfeited.


Dependent care needs and family situations vary and, as a result, a DCFSA may not be beneficial for all military families. Reach out to a personal financial counselor or manager on your installation, the Office of Financial Readiness, and Military OneSource for additional information and support to help you determine if a DCFSA can help your family save money. Check out these resources for more information:


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