Dependent (Day) Care Flexible Spending Account

Generally, any dependent care expense that the IRS allows as a deduction on income tax returns is eligible for reimbursement, provided it is not reimbursed from any other source. This includes expenses incurred for anyone a participant is entitled to claim as a dependent on his or her tax return, regardless of whether that dependent is covered under Leidos' medical, dental or vision plans.

Expenses for registered domestic partners and dependent children of registered domestic partners are not eligible for reimbursement under the Dependent (Day) Care Flexible Spending Account.

Below are examples of eligible dependent care expenses. This list is meant to provide only a summary of eligible expenses.

• Care at a licensed nursery school, day camp, or day care center;
• Services from individuals who provide dependent care in or outside a participant's home, unless the provider is the participant's spouse, own child under age 19, or any other dependent;
• After-school care for children under age 13;
• Household services related to the care of an elderly or disabled adult who lives with a participant; and
• Any other services that qualify as dependent care expenses under IRS regulations.
   

For a detailed list of eligible dependent care expenses, please refer to IRS publication 503, (called "Child and Dependent Care Expenses") available from your local IRS office, or visit the IRS web site.

Below are examples of ineligible dependent care expenses. This list is meant to provide only a summary of ineligible expenses:

• Expenses for food, clothing or education (unless incidental to the care);
• Expenses for overnight camp;
• Expenses for transportation between a participant's house and the place that provides day care services, or the cost of transportation for a care provider;
• Expenses for dependent care when either the participant or his or her spouse is not working or is not looking for work;
• Charges for convalescent or nursing home care for a parent or a disabled spouse;
• Expenses paid to the spouse, a participant's own children under age 19, or any other dependents; and
• Expenses for which a federal child-care tax credit would be taken.

Another way to reduce dependent care expenses is to take a tax credit when filing an income tax return. However, a participant may not contribute to a Dependent (Day) Care Flexible Spending Account and take the tax credit for any expenses reimbursed through the Dependent (Day) Care Flexible Spending Account.

With the tax credit, a participant can claim a deduction for a percentage of eligible dependent care expenses (the same expenses as defined for the Dependent (Day) Care Flexible Spending Account). The total expenses that you may use to calculate the credit may not be more than $3,000 (for one qualifying individual) or $6,000 (for two or more qualifying individuals).

The tax credit percentage applied to eligible expenses decreases as a participant's adjusted gross income rises. Generally, if a participant's family income is greater than $24,000 per year, the Dependent (Day) Care Flexible Spending Account will save more in taxes than the child care income tax credit. However, the advantages of the Flexible Spending Account or the tax credit depend on a participant's overall tax situation and should be discussed with a tax adviser.