It is a pre-tax benefit account used to pay for eligible dependent care expenses, such as daycare, preschool, summer day camp, and after-school programs. Some employers offer it as part of their employee benefits package. The funds in a Dependent Care FSA are deducted from an employee's paycheck before taxes are applied, which can result in significant tax savings. However, there is a limit to the amount that can be contributed to a Dependent Care FSA each year.
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