Employees set aside pre-tax payroll deductions in this take care account to budget for the daycare expenses of a dependent child under age 13.
Qualified expenses include nannies, babysitters, housekeepers, nurse's fees and registration fees to a daycare facility. The cost of pre-K or nursery school, before and after school care and day camp also qualify. To qualify, expenses paid for daycare must allow an employee or the employee's spouse (if they are married) to work or look for employment.
The IRS also offers employees the option of saving for daycare with a credit
that the employee can take on Form 1040.