Dependent Care and The Non-Working Spouse

[Guest BenefitsAnnie]

Hi,

One of my employees would like to participate in the Dependent Care Account. However, her spouse doesn't work. He is not a full-time student, not disabled and he does not take care of the kids. They go to daycare. I'm fairly certain she can't participate but there was a reference to someone who is "married, filing separately" being able to participate in some of the references I was able to find. Does anyone know if there are any circumstances under which a married couple where only one works may utilize the Dependent Care Account.

He volunteers 20 hours per week but it's unpaid.

Thanks!

[masteff]

A Google search on "dependent care fsa volunteer work" finds a number of hits that all say volunteer work does not count. I think they are out of luck on this one.

[My 2 cents]

Excerpt from instructions to Form 2441:

　

　

The care was provided so you (and your spouse if filing jointly) could work or look for work. However, if you did not find a job and have no earned income for the year, you cannot take the credit or the exclusion. But if you or your spouse was a full-time student or disabled, see the instructions for lines 4 and 5, later.

Speaking from my recollection when dealing personally with a dependent care FSA, the amount that can be reimbursed or recognized for credit is limited to the lower earned income figure of the two parents, so if one parent did not have any earned income, then nothing is covered (unless the parent with no income is himself or herself a dependent). I guess tax benefits for day care services are limited to situations where neither parent is available because of paid employment, based on the idea that if employment is not pursued by both parents, why use daycare instead of taking care of the child.