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© Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 30 claim, then the claim paid via the electronic payment card is substantiated without further review. In such instances, the balance of the electronic payment card may be increased with respect to the automatically substantiated claim once the expense paid through the electronic payment card has been incurred. Example: If you use an electronic payment card to pay a day care provider on the first day of the week for the care to be provided during that week, and the claim is automatically substantiated as provided above, the balance of the electronic payment card may be increased with respect to such claim at the end of the week. 4.9 What limits apply to reimbursements under the Dependent Care FSA? You cannot be reimbursed for any expenses above your available account balance. If your claim was for an amount that was more than your current account balance, the excess part of the claim will be carried over into following months, to be paid as your balance becomes adequate. You also cannot be reimbursed for any expenses that arise before the effective date of the Dependent Care FSA, for any expenses that arise before you become a Participant in the Dependent Care FSA, or for any expenses incurred after the close of the Plan Year. Please note that it is not necessary that you have actually paid an amount for that expense to be eligible for reimbursement. You only must have incurred the expense and not have been reimbursed or paid from another source. An expense is "incurred" when the service which gives rise to the expense has been provided, not when you are billed or when you pay the expense. 4.10 Will I be taxed on the Dependent Care FSA benefits I receive? You will not normally be taxed on benefits under the Dependent Care FSA. However to qualify for tax-free treatment, you will be required to file IRS Form 2441 or a similar form with a list of name s and taxpayer identification numbers of any persons who provided you with dependent care services during the calendar year for which you claimed a tax-free reimbursement. 4.11 If I participate in the Dependent Care FSA, will I still be able to claim the household and dependent care tax credit on my federal income tax return? You may choose to participate in the Dependent Care FSA and receive credit on your federal income tax return too. However, the tax credit and the account cannot be used for the same expenses. In addition, the amount of the household and dependent care tax credit is reduced dollar for dollar by the reimbursement you receive from your account. In certain cases, it may be more beneficial for you to claim a tax credit for your dependent care expenses rather than pay for those expenses through the account. You may want to consult your tax advisor regarding the best options under the applicable rules. 4.12 What is the dependent care tax credit? The dependent care tax credit is an allowance for a percentage of your annual eligible dependent care expenses as a credit against your federal income tax. In determining what the tax credit would be, you may take into account only $3,000 of such expenses for one dependent, or $6,000 for two or more dependents. Depending on your adjusted gross income, the percentage could be as much as 35% of your qualifying expenses (to a maximum credit amount of $1,050 for one dependent or $2,100 for two or more