I used it a few years ago. I felt like I was paying for my day care expenses, and not being able to get reimbursed from the dependent care due to the way the system works.
There is a certain dollar amount you can allow for Dependent care. I don't recall the figure as it does sometimes change from year to year.
For Example, lets use $4,000.00 per year is the maximum and that is what you choose to have in your dependent care account. This will be split up evening between your paychecks (based on biweekly cks) which would be about $192.00 deducted from your pay bi-weekly pay and put into the account.
Let's say your daycare is $200.00 per week. You can't request the $200.00 you paid out for daycare last week until the funds in your dependent care account $200.00 in payroll deductions.
Therefore, in a month, you have paid your daycare $800.00 out of your pocket and also through payroll deduction, have paid your Dependent Care Account only $384.00.
Do the math, you have paid an extra $476.00 in the first month meaning, you were only reimursed the $384.00 that you put the dependent account.
For that month and many months after until year end, you will be shorted each month in your pocket. Yes eventually at the end of the year it does catch up. Unless you have that kind of extra money to play with month after month, you could run into hard times financially.
At the end of the year, it all works out because you have received by your entire $4,000.00 you put in. Yes, it does help with taxes.
I didn't have the extra money to play with each month, therefore, it did not work out for me. It made me fall behind on other bills because I had to pay the daycare center and the money was being deducted from my payroll checks, but I could only get reimbursed what I had put in through the payroll deductions.
The Dependent Care Accounts do not work like the Medical Care account if you are familiar with those.
Get more options before making your decision.
Basically it all depends on how much extra money per month you have to play with and don't mind not having it to play with.
B. - Jessup, Maryland