The Dependent Care Spending Account (DCSA) is offered to employees with work-related dependent care expenses. DCSA is a voluntary payroll deduction that allows you to set aside up to $5,000 of your income to reimburse yourself for dependent care expenses. The money in this account is not subject to income tax.

DCSA Advantages

DCSA offers an alternative to filing a tax credit for dependent care expenses. In some cases, you still may be eligible for a small tax credit. DCSA also offers you the following advantages:

• The amount of money deducted from your gross income is not subject to federal, state or local income taxes. You will increase your take-home pay by the amount of tax savings.

• When you withdraw your funds from your savings account, the money is still tax-free.

• Your tax rate on your total income may be lower if you changed tax brackets.

• You can withdraw funds from your account as soon as you incur qualified dependent care expenses, and as often as every two weeks.