What you need to know
A Dependent Care Flexible Spending Account (FSA) helps you manage eligible dependent care expenses. Your pre-tax contributions can be used to pay for child care expenses and more.
The Dependent Care Spending Account requires enrollment annually. If you’d like to participate, please update your selection during the US Benefits Annual Enrollment period.
Dependent Care FSA fast facts
Administrator: Smart-Choice
You contribute through paycheck contributions. You can use the money to pay for eligible dependent care expenses during the calendar year. For employees hired after the first of the year, your benefits effective date is your hire date.
Non-exempt (hourly) employees receive money from PayPal. Get an additional 15% from PayPal, up to $652 annually.
Contribute up to $5,000 per year (a combined limit between you and your spouse). And you don't pay federal or state income taxes on FSA contributions. The Dependent Care FSA balance accumulates throughout the year — you only have access to the amount of funds available in the account.
Plan your expenses carefully. You cannot carry over any money from year to year.
You can submit expenses for qualifying dependents, including your children under age 14 and any other person, regardless of age, who is incapable of caring for him- or herself and can be claimed as a qualified dependent on your federal income tax return.
Eligible expenses include a babysitter or nanny to provide care while you’re at work, daycare provider or after-school care, and preschool tuition. All expenses must take place within the benefit plan year.
The Dependent Care FSA grace period is 2.5 months from the end of the plan year (December 31). This means you have until March 15, 2023, to continue to incur eligible expenses using unused funds from 2022.
The deadline to submit eligible claims from plan year 2022 is April 30, 2023.
FSAs are subject to IRS rules. Be sure to save all your receipts. You may be asked to provide copies to confirm your expenses.
Note: Under federal tax law, PayPal's FSA programs must pass certain non-discrimination tests each year. These tests are designed to ensure that highly compensated or key employees / participants do not receive disproportionately greater benefits. If necessary, the maximum participant contribution may be reduced mid-year to comply with federal law. You will be notified if this impacts you.
** Deadline dates reflected above may change upon further guidance from the IRS.
How do I know how much to contribute?
Typically, this is a use-it-or-lose-it account. Any funds not used by the end of the grace period for the previous plan year (March 15) will be forfeited. You won’t receive a refund if you don’t use all the money in your FSA, which is why it’s important to understand what expenses are eligible and to conservatively estimate your FSA expenses for the coming year.
Use the FSA estimator on Your Benefits Resources (YBR) during Annual Enrollment to help you estimate your expenses. Another way to determine your Dependent Care FSA contribution is to talk to your providers. Each can help you budget your expenses for the upcoming year.
Your contribution can’t be changed (increased or decreased) during the year unless you experience a qualifying life event (e.g., the birth of a child) and notify Your Benefits Resources (YBR) of the change within 30 days of the event. The YBR team can answer your questions about qualifying life events and if you can change your contribution election as a result.
Eligible dependent care expenses
Eligible expenses include a babysitter or nanny to provide care while you’re at work, day care provider or after-school care, and preschool tuition. Expenses must be incurred for the care of eligible family members as described in IRS Publication 503 — Child and Dependent Care Expenses. All expenses must take place within the benefit plan year.
You can submit expenses for qualifying dependents, including your children under age 14 and any other person, regardless of age, who is incapable of caring for him- or herself and can be claimed as a qualified dependent on your federal income tax return.
Submitting a claim
You’ll need to submit your receipts for reimbursement online in YBR. You can also quickly request reimbursement on your smartphone through the Smart-Choice mobile app. Eligible claims are typically processed within 3 to 5 days. You can activate direct deposit online, which will expedite your reimbursement directly to your bank account.