Dependent Care Flexible Spending Account Limit?

Question

My husband currently contributes $5000 towards this and his plan year runs from Jan to Dec.

I recently joined a new job and the plan year through my current employer runs from August to July.

Going by the plan year is there is any buffer for us to contribute more than the annual limit of $5000 towards dependent care.

Thanks!

Answer 1

No, you cannot contribute a total of more $5,000 in dependent care expenses annually.  I see your problem coordinating the FSAs.  If you each want to pay part of the child care through respective FSAs, you have to change the contributions in 2009.

Breaking the FSA into two pieces will not change your overall income taxes.    

If one or both of you earn over the limit for Social Security tax, there may be an advantage to keeping the benefit with one person or splitting it.  Your DCB is not subject to Social Security tax.

Answer 2

The total a married couple can contribute in one calendar year to the Dependent Care FSA is $5,000...this is true even if you file separately.  If you were not married, you could each contribute $5,000 to your own separate plans, but you would each need a dependent child under 13 living with them who receives day care / preschool / day camp.

The best bet is to have the person with the lower income claim the Dependent Care FSA.  Why?  Since Social Security is only taken from the first $102,000 (in 2008) of your salary, the person who earns $107,000 or more will see no social security tax savings from their FSA contribution, whereas the person with $102,000 of earnings or less will enjoy the full $310 savings.  Same thing holds true for medical FSA.

Answer 3

No..$5000 is the combined limit for you both.