Dependent Care Reimbursement Accounts
Carnegie Mellon offers a Dependent Care Reimbursement Account (DCRA) to help you lower your dependent care expenses by paying with tax-free money. With the DCRA, you put aside money from your pay on a pre-tax basis to cover anticipated dependent daycare expenses while you work or attend school. Contributing to a DCRA can save you up to 25% on the money you set aside, depending on your federal tax rate.
NOTE: This account does not pay for medical expenses incurred by your dependents. Use the Health Care Flexible Spending Account to cover those expenses.
- You must be full-time benefits eligible (37.5 scheduled hours per week) to opt in to the DCRA. Members of the Campus Police Association must be scheduled to work 40 hours per week to be eligible.
- The DCRA is offered to domestic employees, as well as expatriates with U.S. sourced income.
- Participation in our insurance plans is not required to participate in the DCRA.
- You must make a new election each year to participate. Elections do not rollover from year to year.
Contributing to an DCRA
- You may contribute up to $5,000/year. (Minimum contribution is $300/year.)
- Contributions will be deducted in equal amounts each pay period. You may contribute over 12 months only.
- Expenses cannot be reimbursed in anticipation of contributions. You may only request money that has actually been contributed.
- Qualified dependent care expenses include daycare or sitter fees, before/after school care, summer day camps, and elder care for a parent living in your home. (See Dependent Care Reimbursement IRS Publication #503 [pdf] for a complete list of covered expenses.)
- Only your IRS-qualified dependents (children for whom you are a legal parent/guardian and can be claimed for federal tax purposes) may be covered.
- Children under age 13 or other dependents who are disabled and incapable of caring for themselves are eligible.
- Both parents must be working or attending school to be eligible.
- Expenses must be incurred during the plan year, while you are contributing.
- If you initiate an account mid-year, you can only seek reimbursement for expenses incurred AFTER you enrolled.
- If you increase your contributions due to a life change, additional contributions can only be used for expenses incurred AFTER the event.
- If you stop contributing, you can only use the funds to reimburse claims incurred during your participation.
- Benefits received through the Cyert Center for Early Education, and any other tax-free child care benefits and contributions made to the DCRA, are limited to $5,000 by the IRS. To see how benefits received from the Cyert Center offset the amount you can contribute tax-free to the DCRA, read Child Care Benefits — Tax Implications [pdf].
- The IRS allows you to claim work-related, dependent care expenses when you file your income tax return. You cannot use both the tax credit and the Dependent Care Reimbursement Account for the same expenses.
- The tax regulations regarding this benefit are complicated for those who use the Earned Income Tax Credit [pdf]. Review the instructions published by the IRS carefully or consult a tax expert for advice.
- Consult a tax professional for information on how DCRA benefits impact tax credits or exemptions for which you may be eligible.