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Guide · Dependent care FSA

How much should you put in a dependent care FSA?

The unused balance is generally forfeited, so the goal is an honest estimate, not the biggest number. Here is a method that works for camp-heavy summers.

By Brightpage Studio · Last checked: 2026-10-24 · General information, not tax advice.

Short answer: elect the amount you are confident you will spend on eligible care in the plan year, not the maximum. Dependent care FSA money you don’t use is generally forfeited, so a slightly low number is safer than a high one.

Why “the maximum” is usually the wrong answer

The tax savings are real. Your contributions come out of your paycheck before income tax and, according to FSAFEDS, aren’t subject to payroll taxes. But the savings only apply to money you actually spend on eligible care. FSAFEDS describes the “use or lose” rule as an IRS rule under which money left in the account after the benefit period ends is forfeited, and says a dependent care account has no carryover (the federal program offers a grace period through March 15 of the following year). Other employers’ plans differ, so check yours. You also generally can’t change the election mid-year without a qualifying life event, per the FSAFEDS enrollment steps.

The legal ceiling for 2027 is $7,500 per household ($3,750 if married filing separately), and your employer may set it lower. Whether you come anywhere near that ceiling depends on how much eligible care you actually buy.

A simple way to pick your number

  1. List your care by week. School-year before- and after-school care, summer camps, a sitter or nanny, preschool. Use real prices where you have them.
  2. Keep only eligible costs. The care must be for a child under 13 (or a disabled dependent) and must let you, and your spouse if you’re married, work or look for work. Day camp can count; overnight camp, summer school, tutoring and kindergarten-and-up tuition don’t. More in our camp eligibility guide.
  3. Remove weeks you may not use. Waitlisted camps, weeks a grandparent might cover, and weeks you might take off. If it isn’t booked or likely, leave it out.
  4. Compare with the limits. Your employer’s cap, the $7,500 household limit, and your earned income (and your spouse’s).
  5. Round down. You can pay for any shortfall out of pocket after tax. You can’t recover an overshoot.

Example (illustrative numbers): two kids, summer camp only

Two children attend day camp. You have six weeks booked and two more weeks on a waitlist, at $300 per child per week.

  • Booked: 2 kids × 6 weeks × $300 = $3,600
  • Waitlisted: 2 kids × 2 weeks × $300 = $1,200 (not counted yet)
  • If all eight weeks come through: 2 × 8 × $300 = $4,800

A conservative election is $3,600. If you would pay for the waitlisted weeks with some kind of care either way (for example a sitter at a similar price), electing up to $4,800 could make sense. Add before- or after-school care to the list only for the weeks and costs you’re certain about.

Example (illustrative numbers): what the savings look like

Suppose your combined marginal rate is 30% (an assumption for this example, not a typical figure: it depends on your federal bracket, payroll taxes and your state). Electing and spending $3,600 would lower your taxes by roughly $3,600 × 0.30 = $1,080. The same arithmetic with your own rate gives your estimate. Your actual savings depend on your actual tax return.

Don’t forget the paperwork it creates

You will need itemized documentation. FSAFEDS asks for a statement from the provider with the service dates, the child’s name, the type of service, the amount billed, and the provider’s name and address, and notes that credit card receipts, cancelled checks and balance-forward statements aren’t acceptable proof (see its eligible-expense list). On your tax return you also report each provider’s name, address and taxpayer ID, which is covered in Publication 503 under the care provider identification test. Asking camps for a tax ID and an itemized receipt when you register is much easier than chasing it in April.

If your care costs are low or uneven

If your eligible costs are small, a smaller election is reasonable, and it is worth comparing with the separate Child and Dependent Care Credit. The two can’t both be applied to the same expenses; see FSA vs. credit. Also remember that plans reimburse care, not payments: a camp you pay for in February is generally reimbursable only once the care is provided (FSAFEDS, for example, lists registration fees paid before services are received as not eligible). Ask your administrator how your plan treats prepayment.

Tip: build the summer part of the list in a calendar view first. A planner that shows which weeks are actually covered (and which are not) makes the “remove the weeks you may not use” step much faster.

Sources

General information, not tax advice. Last checked: 2026-10-24. US federal rules only; your employer’s plan, your state and your own situation can change the answer, so confirm with your plan administrator or a tax professional. CampSorted is not affiliated with the IRS or OPM.

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