Kruze clients are twice as likely to get acquired as the average startup.  Find out why here
Back to questions

Should my startup offer a Dependent Care FSA? What is a Dependent Care FSA account for startups and is it taxable? When should my startup offer a Dependent Care FSA account?

Vanessa Kruze, CPA, is a leading expert in startup taxes and tax compliance. Her team at Kruze Consulting has filed thousands of tax returns for companies that have raised billions in VC funding, and her work has been diligenced by leading VCs, attorneys, and M&A teams at the largest technology companies.
Vanessa Kruze, a highly-experienced CPA, brings valuable tax expertise to startups, drawing from her rich background at Deloitte Tax and as a financial controller for a $20 million startup. As the leader of Kruze Consulting, recognized multiple times in the Inc 5000 list, she specializes in navigating the complex tax landscape for startups. Her firm is known for delivering precise and strategic tax solutions, delivering tax credits utilizing advanced tools to ensure compliance and optimize tax benefits for startups throughout the United States.

Table of contents

Dependent Care FSA account

What is a Dependent Care FSA account for startups and is it taxable?

A Dependent Care FSA account is pre-tax savings account that you can use towards eligible childcare costs. It is one of many employee fringe benefits that are tax-free. Gusto wrote a phenomenal piece on all the FAQs regarding Dependent Care FSA accounts:

A dependent care flexible spending account (FSA) allows your employees to save for qualified dependent care expenses. This can make supporting a family or caring for a spouse or dependent less expensive.

That’s because dependent care FSAs are funded throughpre-tax payroll deductions, which offer two major benefits and tax implications:

  1. Contributing to a dependent care FSA lowers your employee’s taxable income, and that decreases their tax burden—so they owe less come tax time.
  2. Because this money isn’t taxed, they’re saving about 30% on qualified expenses.

Setting up a dependent care FSA at your company helps your employees get the most out of their paycheck—and can help promote your company’s work-life benefits.

What are the dependent care FSA contribution limits? (from Gusto article)

The IRS caps how much money your employees can contribute to their dependent care FSA.

In 2018, the dependent care FSA limit is:

  • $2,500 if your employee is married and filing their taxes separately, or
  • $5,000 if your employee and their spouse are filing jointly, or if they’re filing taxes as a single person or as the head of household.

Should my startup offer a dependent Care FSA? When should my startup offer a dependent Care FSA account?

From what I have seen working with over 1000+ startups, Seed and Series A startups usually don’t offer a dependent Care FSA. Series B and beyond startups usually do.

Categories:

Startup Taxes

READY TO CONNECT FOR A FREE CONSULTATION?

We are the experts at helping seed/VC-backed Delaware C-Corps with their accounting and finances!

Talk to an experienced accountant, not a generic sales person

Alex Janeck Kruze Consulting
Alex Janeck
Edith Silva Kruze Consulting
Edith Silva
Randy Hall Kruze Consulting
Randy Hall
Viz AI

$250M+ VC Funding Raised


"I had a great experience working with Kruze Consulting when we raised Series A. They know what VCs need to see, and how to present a startup’s books and finances. If you are going to raise venture capital, you need experts like Kruze."
Chris Mansi

Chris Mansi

CEO

Startup Venture Capital Assistance

With former venture capitalists on staff, our team is here to help you navigate the fundraising process and manage your board of directors

Scott Orn Kruze Consulting
Scott Orn
COO | Former VC
Healy Jones Kruze Consulting
Healy Jones
VP FP&A | Former VC
Pequity

Scale Remote Operations & Team


"Kruze has supported us above and beyond basic accounting needs by ensuring we have everything we need to expand and support our team wherever they may be located"
Zack Fisch

Zack Fisch

Head of Operations & Legal

Clients who have worked with Kruze have collectively raised over $15 billion in VC funding.

We set startups up for fundrising success, and know how to work with the top VCs.

Vanessa Kruze, CPA Kruze Consulting
Vanessa Kruze, CPA
Founder & CEO
Kruze Logo

Experienced team helping you

Our account management team is staffed by CPAs and accountants who have, on average, 11 years of experience.

Bill Hollowsky, CPA Kruze Consulting
Bill Hollowsky, CPA
VP of Accounting Services
Claudine Vantomme, CPA Kruze Consulting
Claudine Vantomme, CPA
Controller
Morgan Avery Kruze Consulting
Morgan Avery
SUT/R&D Sr. Tax Accountant
Beth Bassler Kruze Consulting
Beth Bassler
Controller, CPA
Protara Therapeutics

Grew from a 2-person startup to a NASDAQ listed public company.


"The Kruze team helped us grow from a 2-person startup to a NASDAQ listed public company in 2 years. We wouldn’t have gotten public without Kruze’s support. Anyone thinking of launching a startup should make Vanessa their first call!"
Jesse Shefferman

Jesse Shefferman

CEO

Kruze Logo

Get in Touch

Please help us connect with you

How can we reach you?

Our first response is typically via email, so please check your inbox.

Help us have a productive first consultation by providing some additional information.

What year was your startup incorporated?

What is your stage of funding?

(pick up from the list)

Approximately how much funding have you raised?

(please enter a dollar value such as 5000000)

Help us understand what you are looking for:

(Optional, click the ones you need)

Anything additional that you’d like to share?

Optional - if you’d like to share anything else to help us prepare for our consultation, please let us know. We are also happy to sign an NDA, just let us know.

  Talk to a leading startup CPA