SPANGDAHLEM AIR BASE, Germany -- Childcare is just one of the costly realities of raising a family, especially overseas. The Defense Department has made a new tool available to help eligible military families meet that challenge.
The Dependent Care Flexible Spending Account, or DCFSA, is a financial benefit made available for sign up eligible service members here, November 13, 2023. The new benefit is designed to let eligible service members diver money from their paychecks to an account that can be used to pay for dependent care services such as preschool, summer day camp, before- or after-school programs, and child or adult daycare.
Eligible service members can contribute as much as $5,000 a year from their paychecks, via allotment, to the account. That money comes out pre-tax, which means that a military family that typically reports $30,000 a year in taxable income, for instance, would instead be able to report $25,000 in taxable income if they took full advantage of the benefit. That means they will pay less in taxes each year, yielding greater take-home pay.
The DOD is on track to implement DCFSA allotments beginning January 1, 2024. Those who would like to participate can sign up during the annual Federal Benefits Open Season from November 13 to December 11, 2023.
Jennifer Walker, the executive director for the Dependent Care Flexible Spending Account initiative, said many service members have eligible dependents and will be able to take advantage of the benefits provided by the DCFSA program.
"That includes families who have children who are under the age of 13 or who have a spouse or other tax dependent, regardless of age, who is mentally or physically incapable of self-care," she said.
The DCFSA, like other pretax flexible savings accounts, is a "use or lose" benefit.
According to the DOD's Office of Financial Readiness, the DCFSA plan year mirrors the tax year, Jan. 1 through Dec. 31. After the plan year ends on Dec. 31, enrollees in a DCFSA have until March 15 of the following year to incur eligible expenses. Claims for expenses incurred must be submitted by April 30, the deadline for submitting claims from the previous plan year. Any funds remaining in the account after April 30 of the following year are forfeited.
Spangdahlem service members interested in taking advantage of the DCFSA can get more information and sign up for the benefit here. All service members are advised to first talk with a personal financial counselor or tax professional before signing up to participate in the program. The 52nd Force Support Squadron's Military and Family Readiness Center (M&FRC) offers free Personal Financial Readiness information, education and personal counseling from certified financial counselors. For more information, visit the 52 FSS M&FRC webpage here.
Information from a DOD News article was used in this story.