Also, since you do not pay Social Security taxes on your Spending Account contributions, your future Social Security benefit could be slightly reduced. Any money that you do not use during the year, you will have to forfeit. This means that you will forfeit any money that is left in the account at the end of the year. You have until April 30 of the following year to submit claims for the prior year. The amount you redirect each year may not exceed your earned income, or if you are married, the earned income of your spouse - whichever is less.
Earned income is gross income earned as an employee, plus net earnings from self-employment.
Expenses may be reimbursed through your Dependent Care Spending Account if they are incurred to provide care for your eligible dependents while you work. If you are married, your spouse must also work, be a full-time student or be disabled. Therefore, you may want to consult with a tax advisor before making your selection. Remember, since you do not pay Social Security taxes on your Spending Account contributions, your future Social Security benefit could be slightly reduced. Any money that you do not use during the year, you will have to forfeit.