You can use the dependent care spending account to reimburse yourself on a before-tax basis for dependent care expenses (child care, elder care, etc.) you pay:

• - So both you and your spouse can work,
• - So your spouse can go to school full-time, or
• - Because your spouse is physically or mentally unable to care for himself or herself.

Health care expenses cannot be reimbursed under the dependent care flexible spending account. Expenses for your domestic partner’s children are not eligible unless the

children qualify as your legal dependents.

You can contribute up to $5,000 per year or up to your spouse’s earned income, if lower, to the account. However, there are some special restrictions on the amount you can contribute:

• - If your spouse is a student or is disabled and not working, you may contribute up to $2,400 per year if you have one dependent or $4,800 per year if you have more than one dependent.
• - If you are married and filing a separate tax return, you may contribute only up to $2,500 per year.

For an expense to qualify as an eligible dependent care expense, the IRS requires the following:

• - For dependents under age 13:
  • - You must be able to claim an exemption on your federal income tax return for the child.
  • - The care can be provided by a relative, unless the relative is your spouse, child or stepchild under age 19 or a relative you can claim as a dependent on your federal income tax return.
  • - If the care is given by a day care center (a center that cares for more than six individuals), that center must comply with all applicable state and local regulations.
• - For dependents age 13 or older, the above requirements apply, as well as:
  • - The individual must live with you and be your dependent for federal income tax purposes and must be physically or mentally incapable of caring for himself or herself.
  • - The care may be given in the home or outside the home, provided the dependent regularly spends at least eight hours each day in your home.

When you submit a claim for dependent care expenses, you will be reimbursed up to the current balance of your account. As future contributions are made, you will automatically be reimbursed for any balance pending on your claim. You will be asked to provide the tax identification number or the Social Security number of your dependent care provider when you file your claim.

A complete list of eligible and ineligible expenses is available from your tax advisor, the IRS Web site at www.irs.gov/pub/irs-pdf/p503.pdf or by calling 800-TAX-FORM (800-829-3676) to request Publication 503.

For some people, the federal income tax credit may save more money in taxes than the dependent care spending account. You should consult your tax advisor before making any decisions to contribute to the dependent care spending account.