There are always "Rules" when Uncle Sam gives us a tax break. Your retirement plan has rules. There are rules when you deduct the interest payable on your home loan.
We all like a tax break. Nobody likes Rules. But, Rules aren't hard to live with once you know what the Rules are.
Flex Accounts enable you to pay for certain expenses . . .TAX FREE. . .but you have to:
plan ahead because you can only enroll once a year; and
your election, with few exceptions, can't be changed during the year; and
any money left in your account at the end of the year cannot be returned to you.
So how can you know, in advance, how much money to put into your Flex Account?
Predictable Type Expenses (costs where you decide when)
Medical - surgeries where you can decide when to do it
Dental - fillings, crowns, etc. where you can decide when to do it
Vision - eye exams & glasses where you can decide when to do it
Use this account to keep the kids, tax free, at the sitter or at daycare while you work. It shouldn't be too hard to “guess-t-mate” the annual amount paid to them.
** Please note, in the situation of divorce, only the custodial parent may claim expenses through a dependent care flex account.
All these expenses .... are for things you know you will be buying anyway and therefore the "Rules" don't really mean anything. You know at the beginning of the year how much you will spend ..... you are going to spend the money anyway .... and therefore you will not have to worry about leaving any money in the account at the end of the year.