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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:
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.
The IRS caps how much money your employees can contribute to their dependent care FSA.
In 2018, the dependent care FSA limit is:
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.
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