This section explains the kind of expenses that are reimbursable with a dependent care account and other important rules of the program. Please read it carefully. Although a reimbursement account is a great way to lower your taxes and save money for certain expenses, you will forfeit any funds left in your account if you don't claim them by the deadline. You can avoid this by following these simple steps:
Meet the deadline for claims. The deadline to submit claims for expenses incurred in the current plan year is June 30 of the following plan year.
For child care expenses to qualify, your child must be a dependent under the age of 13 when the child care is provided. (There is no age limit if your child is disabled.) You must be able to claim an exemption for this child on your federal tax return. However, if you are divorced or separated, your expenses may qualify if you are the custodial parent (have more than 50% custody) even if you can't claim the child's exemption (see IRS Publication 503 for details).
PLEASE NOTE: The Working Families Tax Relief Act of 2004 (WFTRA) provides the definition of tax dependents (IRC 152). If you have used the dependent care reimbursement account to pay for elder care expenses, you may want to consult a tax advisor to determine if your dependent meets the qualifying dependent rules under WFTRA.
If the care is for a parent or other dependent who is disabled, that person must live in your home at least 8 hours a day, be unable to care for himself or herself, and be someone you can claim an exemption for on your federal tax return (even if you don't claim the exemption because the person's income exceeds the allowable limit).
A person who's unrelated to you but lives with you and is a member of your household may be considered your dependent if you provide over half of his or her support and the person qualifies as a dependent under Internal Revenue Code Section 152.
Dependent care services may be provided in your home or someplace else, including family day care homes and day care centers that comply with all applicable state and local laws. Day camp expenses qualify as eligible expenses, but overnight camp expenses do not qualify.
To be reimbursable, the care must be provided sometime from the effective date of your enrollment through the current plan year. This is different than if you claim a tax credit on your current federal tax return, which bases eligibility on the year when you paid for the dependent care rather than when the care was provided.
If you need help determining whether your expenses qualify for reimbursement, check IRS Publication 503 and/or consult a tax advisor.
In other words, over a 12-month period you may contribute a minimum of $20 per month up to a maximum of $416.66 per month (or $208.33 if you're married and filing a separate tax return). If you enroll mid-year, you may contribute more than $416.66 per month (up to the applicable annual household limit).
If you earn more than $120,000 in 2017 you're considered a "highly compensated employee" under IRS rules and may be subject to a lower maximum contribution than listed above. This program can't determine your maximum contribution until all enrollment documents have been processed (typically February or March). We will notify you if we determine that you must reduce your contribution amount.
Under no circumstances may your annual contribution exceed the applicable maximum annual contribution, your annual earned income, or your spouse's annual earned income, whichever is less.
If you experience a change in status that's listed below, you're permitted to take the action that's listed below that change. You have 60 days following the date of your status change to take the corresponding action.
Your completed form(s) must be received at the State Controller's Office by the 10th of the month to be effective on the first of the following month.
May enroll in reimbursement account(s) as newly eligible.
May enroll in reimbursement account(s) as newly eligible or, if currently enrolled, may cancel/change reimbursement accounts.
May enroll in reimbursement account(s) as newly eligible or, if currently enrolled in a reimbursement account, may increase payroll deduction.
May enroll in dependent care account as newly eligible or, if currently enrolled in a dependent care account, may cancel/change enrollment.
May enroll in reimbursement account(s) as newly eligible or, if currently enrolled, may cancel/change elections.
If currently enrolled in reimbursement account(s), may cancel/decrease payroll deduction. New enrollments not allowed.
If currently enrolled in dependent care account, may cancel/decrease payroll deduction. New enrollments not allowed.
If currently enrolled in dependent care account, may cancel/change enrollment. New enrollments not allowed.
May enroll in dependent care account as newly eligible or, if currently enrolled, may cancel/change enrollment.
In addition to the permitting events listed above, here are some other payroll status changes and how they affect your enrollment:
Non-Industrial Disability Insurance (NDI): If you go on NDI while enrolled in a dependent care reimbursement account, your monthly deductions remain in effect and will be reflected on your NDI check.
Industrial Disability Leave (IDL) and Temporary Disability (TD): If you go on IDL or TD while enrolled in a dependent care reimbursement account, your account deductions will stop for as long as you're on IDL or TD. If you return to regular pay within the plan year, your deductions will resume. However, if you go on IDL or TD with Supplementation (IDL or TD/S), your reimbursement account deduction will continue, provided the amount of your supplementation income is large enough to cover the full amount of your account deductions.
State Disability Insurance (SDI) for employees in Bargaining Units 1, 3, 4, 11, 14, 15, 17, 20 & 21: If you go on SDI while enrolled in a dependent care reimbursement account, your enrollment will stop while you are on leave. If you return to pay status in the same plan year, your enrollment will resume.
Unpaid Leave of Absence: If you are on an unpaid leave of absence while enrolled in a dependent care reimbursement account, your enrollment will stop while you are on leave. If you return to pay status in the same plan year, your enrollment will resume.
Military Leave: If you are called to active military duty for the War on Terrorism, you are eligible to retain your State benefits for up to 730 calendar days provided by GC Section 19775.18.