Episode 163: Maximize Tax Savings with a Dependent Care FSA

Did you know you could get a 22–37% discount on your childcare or dependent care expenses just by using pre-tax dollars? In today’s episode, I dive into the often-overlooked but highly valuable Dependent Care Flexible Spending Account (FSA). While Health FSAs and HSAs get plenty of attention, Dependent Care FSAs can offer significant tax advantages—especially for dual-income families or single parents.

I break down who qualifies, what kinds of care are eligible, how much you can contribute, and what special considerations apply if you're divorced, filing separately, or classified as a highly compensated employee.

Whether you’re a physician with young kids or caring for a dependent adult, understanding how to use this account effectively could save you thousands.

In this episode, you’ll learn:

- How Dependent Care FSAs work and how they differ from Health FSAs

- Who qualifies as a dependent for reimbursement

- What expenses are eligible (and what’s not)

- Key contribution limits for 2025 and special rules for high-income earners

- How divorce and custody arrangements affect eligibility

- How to coordinate Dependent Care FSAs with the Child and Dependent Care Tax Credit

- Common mistakes and nuances to watch out for

Resources Mentioned:

IRS Publication 503: https://www.irs.gov/publications/p503

Episode 137: Flexible Spending and Healthcare Savings Accounts

Disclaimer: I am not a CPA. Please consult your tax advisor for personalized guidance.

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Dr. Elisa Chiang is a physician and money coach who helps other doctors reach their financial goals by mastering their money mindset through personalized 1:1 coaching .

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