And one of the reasons for this steady surge toward home-based employment? Parenting and child care, and the ability to make your own hours to accommodate for a growing family's always-hectic schedule.
A quick note on freelancing vs. contracting
A few weeks ago, we discussed the availability of FSAs to freelancers. But there's an important distinction to be made between freelancers and contractors. Freelancers work for themselves, often doing work for various clients simultaneously. A contractor usually has a signed contract with one client to perform a specific role for a set period of time.
If you're a contracted worker, chances are, you enjoy the freedom that comes along with working when you want, where you want, or even moving on when the work no longer interests you.
Let's start with the answer you want
Unfortunately, the IRS says that self-employed workers aren't eligible for FSAs. I know, that hurts a bit. If you have a spouse that's eligible for an FSA through their employer, they should consider opening one, since you and any dependent children are also eligible to use those funds.
There are other options (especially if you have children)
There's good news for those with children: If your spouse can give you access to an FSA, you can use your FSA to pay for approved over-the-counter medical items like contact lens solution, nasal spray, breast pumps and accessories, and even copays. Items containing an active medical ingredient like acne medication, sleep aids, and allergy medication are also eligible with a valid prescription.
You can also consider a dependent care FSA, which can be used to pay for childcare for a child 12 and younger. Specifically, summer camps, preschool tuition, and daycare to name a few.
Finally, you might want to consider opening an HSA if you're self-employed and currently enrolled in a high deductible health plan (HDHP). HSAs are similar to FSAs in that they cover medical expenses like OTC medicine, prescriptions, and copays.
So be sure to explore your tax advantaged options when it comes to defraying the cost of childcare. Because let's face it: Even home-based workers need a little help sometimes.
Whether you budget week-to-week, or plan to use your FSA for bigger things, our weekly Real Moneycolumn will help you maximize your flex spending dollars. Look for it every Tuesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.
Depending on where you live in the U.S., spring sure took its time getting here. But at our offices in New York City, this week represented 2018's first real taste of warmer weather. (We hope...)
We don't spend a lot of time covering dependent care FSAs on these pages, but summer is always a good time to see if this account is right for your family. Why? Because summer day camp is an eligible expense for dependent care FSA holders!
It seems strange to be thinking about cookouts and and camp songs on a site built around health and financial wellness, but the dependent care FSA is a great way for people to set aside tax-free money toward any relevant care costs -- including daycare and camp. And it looks like the warm weather has the media thinking about these things, too, based on the headlined below.
A recent study by the RAND Corporation, a nonprofit, global policy firm, shows that voluntary summer programs like daycamp have a significant, positive impact on low-income students during a time when they fall behind their wealthier peers both academically and socially.
Their research also shows that children benefit from learning social and behavioral skills in different settings with new peers.
The problem comes from accessibility and cost. Many parents looking for assistance during the summer may not realize there are programs available to them to offset these expenses. The article suggests parents check to see if a camp participates in U.S. government assistance programs, as well as dependent care FSAs, which are eligible to cover day camps (overnight and sleepaway camps do not apply).
There may still be time to make this happen for the 2018 summer season. But if you miss out now, this is the perfect time to start planning for summer day camp expenses for 2019. And the next article discusses just that...
Once we started thinking about how planning is key to maximizing our FSAs, we were reminded of a great piece from last year's open enrollment season, in which the author highlighted how a little foresight at open enrollment can offer a huge win come summer camp season.
While you might not be thinking about s'mores when holiday music is already being played in stores, there are some significant savings to be had the following year.
If you already have a dependent care FSA, you're likely aware you can set aside up to $5,000 in tax-free funds for child care expenses for 2018 (as long as the child is under 13 and both parents are either gainfully employed or seeking gainful employment). But if you were saving for summer expenses, chances are you needed to make that decision at open enrollment the previous year.
Camp and other summer child-care costs can be a big line item for working parents. Though prices vary, summer day camp programs accredited by the American Camp Association average $314 per week. Using a dependent care FSA can help parents save an average of 30% on these services, while also reducing your overall tax burden.
By its design, a dependent care flexible spending account (DCFSA) is designed to allow workers to set aside pre-tax dollars to pay for eligible care expenses for a child, disabled spouse, elderly parent or other individual listed as a dependent who is physically or mentally incapable of self-care. Day camps, such as soccer, football, ballet, etc. are eligible with a DCFSA, provided that they enable the account holder to be gainfully employed, seek gainful employment or go to school full-time. Classes have the potential to be eligible, but on a case-by-case basis. If you can prove that these Parks & Rec classes allow you to work, seek work or pursue an education, they will most likely be covered by your benefit.