Dependent Care Assistance Plan - Frequently Asked Questions

Is the DCAP a better choice for my family in comparison to the child tax credit?

Is the DCAP a better choice for my family in comparison to the child tax credit?
The IRS allows a tax credit for dependent care or there is the option to utilize the DCAP. Participants cannot claim the same expenses for both the DCAP and Federal Income Tax Credit, so participants need to decide which is better. Generally, if an employee household income is greater than $26,000 per year, pre-taxing dependent day care benefits through the employer-sponsored plan will save the employee more than the child tax credit.

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Can employees change elections during the plan year?
No, unless there is a change in the participant’s status or other qualifying event as defined by the IRS.

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Why is the limit on this benefit only $5000?
The limit for any dependent care plan is federally capped at $5,000 per year. The IRS limits the amount you can put into the DCAP as follows:

• $2,500 maximum contribution, if you are married and filing separately.
• $5,000 maximum contribution, if you are married filing a joint return, or if you are a single parent.

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Which dependents are eligible under the BASE® DCAP?

• Children under age 13 in the participants custody whom are claimed as a dependent on their tax return.
• A spouse who is incapable of self-care.
• A dependent that lives with the participant, such as a child over age 13, parent, sibling, or in-law-who is incapable of self-care, and who is claimed as a dependent on their tax return.
• If care for a disabled spouse or dependent is provided outside the home, the dependent must live with the participant at least eight hours a day.

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