Dependent Care Spending Accounts Use it or lose it! 11

What is a Dependent Care Spending Account? Per the IRS, guidelines are: Pre-tax savings account to pay for child-care or elder-care expenses for someone on your tax return (pre-federal, state, SS & Medicare taxes) Care must be needed so that you can work You must provide your provider’s Social Security number so be sure they are claiming the income Use it or Lose it! 2

How much may I contribute? CMH allows: Between $100 and $5000 (even if one child) Withholding is based on # of paychecks remaining in the year (24 max) May be started, stopped or changed at hire, during Open Enrollment or after a Qualifying Event. (Note: a change in dependent care tuition is a qualifying event.) 3

CMH subsidizes your DC Spending Account! CMH will help fund your DCSA. Your previous year’s income tax return determines the subsidy: Gross income reported on on your last tax returnCMH Subsidy Over $60,00015% $30,000 to $60,00020% Under $30,00025% 4

How does the subsidy work? For example, say you are signing up for a $5,000 (max) DCSA. The chart below shows how the subsidy works You contributeSubsidy % CMH contributes $4348 x 15% = $ 652 $4167 x 20% = $ 833 $4000 x 25% = $1000

How does the Subsidy reach my DC Spending Account? Say you signed up for a $3000 DCSA and are to receive a $500 subsidy. These steps occur:  HR instructs Payroll to give you a $500 taxable bonus  HR sets your DCSA deduction at $500 that week  The entire bonus will be deducted before Federal and state tax withholding Social Security & Medicare tax withholding  Finance submits your $500 to UMR  You may submit for $500 reimbursement from UMR  Your W-2 income will not reflect the bonus but will show $3000 was withheld for your DC Spending Account