Asked by tee
Which of the following statements is FALSE regarding the use of Dependent Care Flexible Spending Accounts (FSAs)?
Contributions to a Dependent Care FSA are made with pre-tax dollars.
Funds must be used for qualifying expenses by the end of the calendar year.
Taxpayers may still be eligible to claim the Child and Dependent Care Credit.
The maximum contribution limit increases based on the number of qualifying dependents.
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Answered by
GPT-5 mini
AI
The false statement is: "The maximum contribution limit increases based on the number of qualifying dependents."
Explanation: Dependent Care FSA limits are per household (not per child). The typical limit is $5,000 per household ($2,500 if married filing separately), regardless of how many qualifying dependents you have. (Also note that FSA rules are based on your employer's plan year — not necessarily the calendar year — and you can still claim the Child and Dependent Care Credit, but the credit is reduced by amounts reimbursed through the FSA.)
Explanation: Dependent Care FSA limits are per household (not per child). The typical limit is $5,000 per household ($2,500 if married filing separately), regardless of how many qualifying dependents you have. (Also note that FSA rules are based on your employer's plan year — not necessarily the calendar year — and you can still claim the Child and Dependent Care Credit, but the credit is reduced by amounts reimbursed through the FSA.)
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