2022 Dependent Care FSA Limit
The 2022 Dependent Care FSA Limit is $5,000.
Effective 2022-01-01Source: Publication 503 (2022), Child and Dependent Care Expenses (IRS)Verified 2026-08-29
Compared with 2021
| Item | 2021 | 2022 | Change |
|---|---|---|---|
| Exclusion limit | $10,500 | $5,000 | -$5,500 (-52.4%) |
Who it applies to
Employees who participate in a dependent care assistance program or dependent care FSA offered by their employer
What changed this year, and why
The 2022 dependent care flexible spending account (FSA) exclusion limit is $5,000. The temporary enhancements enacted for 2021 under the American Rescue Plan Act expired, returning the limit to its prior level.
Common questions
- What was the maximum dependent care FSA contribution limit for 2022?
- For 2022, an employer may exclude up to $5,000 of dependent care assistance benefits from an employee's income. Married employees filing separately are subject to a lower dollar cap, as described in IRS Publication 503. This limit returned to $5,000 after the American Rescue Plan Act temporarily raised it for 2021.
What counts as a dependent care benefit
Dependent care benefits are the amounts your employer provides to help pay for the care of your qualifying person while you work. There are three forms these benefits can take. First, amounts your employer pays directly to you or your care provider. Second, the fair market value of care in a daycare facility provided or sponsored by your employer. Third, pre-tax contributions you make under a dependent care flexible spending arrangement. Your salary may have been reduced to pay for these benefits. If your employer provides these benefits under a qualified plan, you may be able to exclude them from your income. Self-employed individuals who receive benefits from a qualified dependent care benefit plan are treated as both employer and employee, so they get a deduction rather than an exclusion. The amount you can exclude or deduct is limited to the smallest of several amounts, including a maximum dollar limit.
Dependent care benefits in- clude: 1. Amounts your employer paid directly to either you or your care provider for the care of your qualifying per- son while you work, 2. The fair market value of care in a daycare facility pro- vided or sponsored by your employer, and 3. Pre-tax contributions you made under a dependent care flexible spending arrangement.
Publication 503 (2022), Child and Dependent Care Expenses (IRS)
Your exclusion is the smallest of five amounts
For 2022, the total amount of dependent care benefits you can exclude from income cannot exceed the smallest of five amounts: the total dependent care benefits you received during the year, the total qualified expenses you incurred during the year, your earned income, your spouse's earned income, or the maximum amount allowed under your employer's dependent care plan. For 2022, that plan maximum is $5,000. If either you or your spouse had zero earned income for the year, the smallest of these five amounts would be zero, and no exclusion would be available. There is a special rule that treats a spouse who is a full-time student or who is physically or mentally unable to care for themselves as having earned income for each applicable month, which can prevent the benefit from being wiped out in that situation. The definition of earned income used here is the same one applied when computing the child and dependent care credit, except that it excludes any dependent care benefits you actually received.
The amount you can exclude or deduct is limited to the smallest of: 1. The total amount of dependent care benefits you re- ceived during the year, 2. The total amount of qualified expenses you incurred during the year, 3. Your earned income, 4. Your spouse's earned income, orCAUTION ! 5. The maximum amount allowed under your dependent care plan. For 2022, the maximum amount that can be excluded from an employee's income through a dependent care assistance program is $5,000
Publication 503 (2022), Child and Dependent Care Expenses (IRS)
A spouse with no earned income can wipe out the benefit
The amount of work-related expenses you use to figure your credit can't be more than your earned income for the year if you are single at the end of the year, or the smaller of your or your spouse's earned income for the year if you are married at the end of the year. For married couples, you use your spouse's earned income for the entire year, even if you were married for only part of the year. This means if your spouse has no earned income or very low earned income, it can severely limit or eliminate your credit. For example, if your spouse earned nothing during the year, your work-related expenses for credit purposes are reduced to zero, regardless of how much you actually spent on care. The rule applies to the credit calculation, not the exclusion. Separated spouses who are legally separated or married and living apart aren't considered married for purposes of this limit and use only their own income.
The amount of work-related expenses you use to figure your credit can't be more than: 1. Your earned income for the year if you are single at the end of the year, or 2. The smaller of your or your spouse's earned income for the year if you are married at the end of the year. Earned income for the purpose of figuring the credit is defined under You Must Have Earned Income, earlier. For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year.
Publication 503 (2022), Child and Dependent Care Expenses (IRS)
Which child or adult the care has to be for
To claim the credit for child and dependent care expenses, the care must be for one or more qualifying persons who are identified on Form 2441. A qualifying person includes your dependent who is under age 13 when the care was provided. The care must also enable you, and your spouse if filing jointly, to work or look for work. You must meet several other tests as well, including having earned income during the year and making payments to someone you cannot claim as a dependent. If you exclude or deduct dependent care benefits from a dependent care benefit plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses in order to claim a credit on the remaining amount. The qualifying person test ensures the credit benefits are directed toward legitimate dependent care needs.
Qualifying Person Test. The care must be for one or more qualifying persons who are identified on Form 2441.
Publication 503 (2022), Child and Dependent Care Expenses (IRS)
Using the FSA shrinks the dependent care credit
If you exclude dependent care benefits from your income, the amount of the excluded benefits is not included in your work-related expenses and reduces the dollar limit for the credit. This means using your FSA to pay for dependent care reduces the expenses you can claim for the dependent care credit. The IRS prevents double benefits by requiring you to reduce your work-related expenses by the amount you exclude. For 2022, if you exclude the full $5,000 in dependent care benefits, those dollars cannot also be counted toward the credit. You must choose between excluding benefits from income or claiming them toward the credit, but you cannot do both with the same dollars. This coordination rule ensures taxpayers receive the tax benefit once, not twice, on the same dependent care expenses.
Effect of exclusion on credit. If you exclude dependent care benefits from your income, the amount of the exclu- ded benefits: 1. Isn't included in your work-related expenses; and 2. Reduces the dollar limit, discussed later.
Publication 503 (2022), Child and Dependent Care Expenses (IRS)
The statement your employer must give you, and going over the cap
Your employer must give you a Form W-2 showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Your employer will also include in your wages shown in box 1 of your Form W-2 any dependent care benefits that exceed the maximum amount allowed to be excluded. For 2022, the maximum amount is $5,000. This means if your employer provides more than $5,000 in dependent care benefits, the excess is included in your taxable wages. You must report the full amount from box 10 on Form 2441, but only the amount up to $5,000 can be excluded from income. Any amount over $5,000 is already taxed as wages and cannot be excluded. The statement ensures you know exactly how much dependent care assistance you received and how much remains tax-free.
Statement for employee. Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Your employer will also include in your wages shown in box 1 of your Form W-2 any dependent care benefits that exceed the maxi- mum amount of dependent care benefits allowed to be ex- cluded. For 2022, the maximum amount is $5,000 ($2,500 if married filing separately).
Publication 503 (2022), Child and Dependent Care Expenses (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Publication 503 (2022), Child and Dependent Care Expenses (IRS)
- Exclusion limit
For 2022, the maximum amount that can be excluded from an employee's income through a dependent care assistance program is $5,000 ($2,500 if married filing separately).