What are ‘Dependent Care Benefits’
Dependent care benefits are provided by an employer to an employee for use in caring for dependents, such as young children or disabled family members. Dependent care benefits may include flexible spending accounts, paid leave, and tax credits and can be worth thousands of dollars to those who are eligible for them.
Breaking Down ‘Dependent Care Benefits’
Dependents, according to the Internal Revenue Service (IRS), are treated as an exemption credit that may be claimed on an annual tax return. On its own, the dependent credit can reduce a filer’s taxable income by thousands of dollars. Children are the most commonly claimed dependent, though dependent care benefits may be extended to a variety of people given that they meet several stipulations. For example, dependents may also be relatives, roommates, or even romantic partners. The IRS provides a guide on who may be claimed as a dependent.
Dependent care benefits are available to individuals who have children of preschool age. Such benefits may take the form of child care tax credits or a dependent care flexible spending account (FSA). Each provides tax savings based on money spent on child care.
Dependent care benefits are part of an overall employee benefits system as administered by the IRS. A tally of such benefits may be found…