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Written by: Kristen Jowers, M.S., and Nichole Huff, Ph.D, CFLE

One part of a Permanent Change of Station (PCS) move includes establishing childcare at the next duty station. Childcare expenses are an important part of a military family’s spending plan and may include after-school care, partial-day preschool, and summer programs that meet certain requirements.  Whether the family is pursuing childcare on-base or in the community, understanding how to utilize the dependent care flexible spending account (DCFSA) can help military families meet their unique dependent care needs, supporting the family’s readiness and alleviating the challenge of relocations and deployments.

What is the DCFSA?

Dependent care flexible spending accounts (DCFSA) allow service members to set aside pre-tax dollars from their paychecks to cover eligible dependent care expenses, including daycare, preschool, after-school care, summer camp, and elder care expenses. DCFSA launched during Open Season 2023. In the first year of DCFSA enrollment, 5,377 Uniformed service members enrolled in the program. That is 1.3% of the eligible service member population, which includes service members with dependents under the age of 13.

How does it work?

While funds are deposited into the account, actual expenses must be paid upfront by the service member who then submits paperwork to be reimbursed for eligible dependent care expenses. Dependent care expenses must be related to work; for example, putting a child in daycare while the service member or spouse works. A DCFSA does not cover babysitting expenses for a child to be in care for non-work related needs or recreation (e.g., a date night).

Funds deposited into the account are “use it or lose it.” Funds expire at the end of a designated time period. Because of this, you will want to inform service members and spouses that if they are not going to submit the paperwork required to make a claim and get reimbursed, then they should not use the DCFSA. Watch this FINRED video to understand more about how a DCFSA works.


You can help service members determine their eligibility for a DCFSA, which is available as a benefit for: (1) regular (active) component service members, (2) Active Guard Reserve members on Title 10 orders, and (3) DoD civilian employees. There is no income limit for qualifying to open a DCFSA. The service member must have qualifying dependent care expenses and the dependents must be under the age of 13 and claimed as a dependent on the service member’s tax return. Some persons over the age of 13 may be eligible if they are physically or mentally incapable of self-care.

Contribution Limits

Each household can contribute from $100 to $5,000 per year. In order to qualify, both spouses must have earned income or be a full-time student at least five months of the tax year. For families where both parents may have access to a flexible spending account through their employer, there is a maximum amount of $5,000 per household that can be set aside per family before taxes (not per child or per working parent). Married couples who intend to file taxes separately can set aside up to $2,500.

Tax Implications

The advantages of the DCFSA are multi-pronged. Funds deposited into a DCFSA avoid federal taxes, most state taxes, social security, and Medicare taxes. Since the money is set aside before taxes are calculated, enrollment in a DCFSA may reduce a military family’s taxable income, thus decreasing their overall tax burden by contributing to a flexible spending account. In the instance of spouses who both have access to and contribute the maximum to a DCFSA, only $5,000 will be excluded from taxation. The other $5,000 will be taxed. Detailed tax implications of the DCFSA are included in OneOp’s on-demand webinar, 2024 Tax Updates: What Service Providers Need to Know along with more information about qualified and non-qualified expenses. Service members should be encouraged to work with MilTax experts or personal financial managers in order to weigh any other tax credits that may be beneficial for their specific situation, including the child and dependent care tax credit or earned income tax credit.

Open Season

As more service members become educated about DCFSA, they may be coming to you with questions about how and when to enroll. Service members can sign up for a DCFSA during Open Season from mid-November to mid-December which runs concurrently with Federal Benefits Open Season or when experiencing a qualifying life event. To enroll, direct service members to the FSAFEDS web page:

To learn more about flexible spending accounts, check out the OneOp webinar, Flexible Spending Accounts: A Tax Advantaged Way to Pay for Expenses.


Office of Financial Readiness. (n.d.). Understanding the Dependent Care Flexible Spending Account Benefit.

Military OneSource. (n.d.). Dependent Care Flexible Spending Account.

Photo by Andrey Popov on Adobe Stock