How to Set Up Dependent Care Flexible Spending Arrangement Deduction

This tutorial shows how to set up a Dependent Care Flexible Spending Arrangement Deduction inside Payroll Mate® software.

A Dependent Care Flexible Spending Arrangement (DCFSA) is a pre-tax benefit account used to pay for eligible dependent care services.
https://www.irs.gov/pub/irs-pdf/i2441.pdf 

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Summary of Steps

This is just a summary; please click “Download Tutorial” for detailed instructions with screenshots.

  • Click → Company from shortcuts
  • Click → Deduction Categories
  • Click → Add
  • Enter Title, Abbreviation, Select Calculation (Fixed is the general method) and Paid by
  • Enter Default amount (can modify at employee level) and Cutoff as applicable (Note: There is generally a yearly maximum allowed for this type of deduction)
  • Checkmark the W2 Options as applicable
  • Click Exemptions and checkmark Federal Income Tax, Social Security (employer/employee), Medicare (employer/employee) and Federal Unemployment (Note: This tutorial assumes that the Dependent Care FSA deduction payroll item is exempt from federal tax withholding.)
  • Click → OK

You will apply the Dependent Care FSA deduction to each employee as needed

  • Click → Employees from shortcuts
  • Select the employee to edit
  • Click → Edit
  • The Modify Employee Wizard will open, Click → Next until you reach the Deductions page
  • Checkmark to select Dependent Care FSA and enter deduction amount
  • Click → Next until you reach the end of the wizard
  • Click → Finish
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