Flexible spending accounts (FSAs) are employer-sponsored plans that allow
workers to set aside pretax dollars to pay certain unreimbursed expenses. Funds
in dependent-care accounts can reimburse parents for after-school programs or
summer camp, among other things. Workers’ contributions to FSAs aren’t subject
to federal payroll taxes, or in many cases, state taxes.
For dependent-care FSAs, the limit is usually $5,000 per family.
Just for 2021, Congress raised the limit for dependent-care accounts to $10,500
because of the pandemic, and it also raised the child’s age limit from 12 to 13 for
claiming reimbursements from these accounts.
Congress allowed workers to carry over unused funds from 2021 to 2022, or for up to 12 months.