What This Bill Does
This bill allows workers to use dependent care FSAs (flexible spending accounts, which are accounts where workers set aside pre-tax money to pay for care expenses) to pay for more types of activities for their children and dependents. The bill also lets workers keep unused money in these accounts instead of losing it, and increases the maximum amount workers can set aside each year.
Who It Affects
Workers who use dependent care FSAs. Employers who offer these accounts. Families with children and dependents under age 15.
Key Provisions
• Workers can now use dependent care FSA money to pay for sports programs and instruction for their dependents (Sec. 2).
• Workers can now use dependent care FSA money to pay for one-on-one tutoring or small group tutoring (groups of four students or fewer) for their dependents (Sec. 2).
• Workers can now use dependent care FSA money to pay for music and art programs and instruction for their dependents (Sec. 2).
• Dependent care FSA plans must automatically carry forward unused contributions of $20 or more to the next year instead of forfeiting the money (Sec. 4).
• Workers can set aside up to $15,000 per year in dependent care FSAs, increased from $5,000 (Sec. 5).
What Changes
Dependent care FSAs now cover sports, tutoring, and art expenses. Workers keep unused money in their accounts instead of losing it. The yearly contribution limit increases. Dependents can be covered under the program until age 15 instead of age 13.
Important Definitions
Qualified sports expenses: Money paid for a dependent's participation in or instruction for physical exercise or physical activity programs.
Qualified tutoring expenses: Money paid for a dependent's participation in virtual or in-person individual tutoring or small group tutoring (four or fewer students).
Qualified art expenses: Money paid for a dependent's participation in or instruction for music or art programs.
Effective Date
Taxable years beginning after December 31, 2022.
I
118TH CONGRESS
1ST SESSION
H. R. 478
To amend the Internal Revenue Code of 1986 to allow for the inclusion
of additional expenses in dependent care FSAs, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 24, 2023
Mrs. MILLER of West Virginia introduced the following bill; which was
referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to allow for
the inclusion of additional expenses in dependent care
FSAs, and for other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
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This Act may be cited as the ‘‘Working Families
4
Childcare Access Act of 2023’’ or the ‘‘WFCA Act of
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2023’’.
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SEC. 2. ADDITIONAL EXPENSES INCLUDED IN DEPENDENT
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CARE ASSISTANCE PROGRAMS.
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(a) IN GENERAL.—Section 129(e) of the Internal
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Revenue Code of 1986 is amended—
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•HR 478 IH
(1) in paragraph (1), by striking ‘‘or provision
1
of, those’’ and inserting ‘‘or provision of, qualified
2
adoption expenses (within the meaning of section
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137(d)), qualified sports expenses, qualified tutoring
4
expenses, qualifying art expenses, or those’’, and
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(2) by adding at the end the following new
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paragraphs:
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‘‘(10) QUALIFIED
SPORTS
EXPENSES.—The
8
term ‘qualified sports expenses’ means expenses paid
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or incurred for the participation or instruction of a
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dependent in a program of physical exercise or phys-
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ical activity.
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‘‘(11) QUALIFIED TUTORING EXPENSES.—The
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term ‘qualified tutoring expenses’ means expenses
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paid or incurred for the participation or instruction
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of a dependent in virtual or in-person—
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‘‘(A) individual academic tutoring, or
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‘‘(B) small-group academic tutoring in a
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group of four students or fewer.
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‘‘(12) QUALIFIED ART EXPENSES.—The term
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‘qualified art expenses’ means expenses paid or in-
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curred for the participation or instruction of a de-
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pendent in a program of music or art.’’.
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•HR 478 IH
(b) EFFECTIVE DATE.—The amendments made by
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this section shall apply to taxable years beginning after
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December 31, 2022.
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SEC. 3. DEPENDENT CARE EXPENSES ALLOWED FOR CHIL-
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DREN AND DEPENDENTS UP TO AGE 15.
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(a) IN GENERAL.—Section 129(e)(1) of the Internal
6
Revenue Code of 1986, as amended by section 1, is
7
amended—
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(1) by striking ‘‘or provision of, qualified adop-
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tion expenses’’ and inserting ‘‘or provision of, with
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respect to a qualifying individual, qualified adoption
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expenses’’,
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(2) by striking ‘‘The term’’ and inserting the
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following:
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‘‘(A) IN GENERAL.—The term’’, and
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(3) by adding at the end the following:
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‘‘(B) SPECIAL
RULE.—For purposes of
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subparagraph (A), the term ‘qualifying indi-
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vidual’ has the meaning given in paragraph (1)
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of section 21(b), except such paragraph shall be
20
applied by substituting ‘age 15’ for ‘age 13’.’’.
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(b) EFFECTIVE DATE.—The amendments made by
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this section shall apply to taxable years beginning after
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December 31, 2022.
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•HR 478 IH
SEC. 4. CARRY FORWARD OF UNUSED BENEFITS.
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(a) IN GENERAL.—Section 129(d) of the Internal
2
Revenue Code of 1986 is amended by adding at the end
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the following new paragraph:
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‘‘(10) BENEFIT CARRY FORWARD RULES.—
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‘‘(A) IN GENERAL.—A plan meets the re-
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quirements of this paragraph if it provides for
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the automatic carry forward from the close of
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a plan year to the succeeding plan year of any
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aggregate unused contributions totaling $20 or
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greater.
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‘‘(B) SMALL BALANCES.—For purposes of
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subparagraph (A), if an eligible employee car-
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ries a balance of less than $20 at the end of a
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plan year, such employee may elect to carry for-
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ward such balance to the next plan year or, if
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such employee makes no election, such balance
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may be forfeited.
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‘‘(C) EXCLUSION FROM GROSS INCOME.—
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No amount shall be included in gross income
20
under this chapter by reason of any carry for-
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ward under this paragraph.
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‘‘(D) COORDINATION
LIMITS.—The max-
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imum amount which may be contributed to a
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dependent care assistance flexible spending ar-
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rangement for any year to which an unused
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•HR 478 IH
amount is carried under this paragraph shall
1
not be reduced by such unused amount.’’.
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(b) CONFORMING AMENDMENT.—Section 125(d)(2)
3
of such Code is amended by adding at the end the fol-
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lowing new subparagraph:
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‘‘(E) EXCEPTION FOR DEPENDENT CARE
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ASSISTANCE
FLEXIBLE
SPENDING
ARRANGE-
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MENTS.—Subparagraph (A) shall not apply to a
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dependent care assistance flexible spending ar-
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rangement which conforms to the benefit carry
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forward rules of section 129(d)(10).’’.
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(c) EFFECTIVE DATE.—The amendment made by
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this section shall apply to taxable years beginning after
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December 31, 2022.
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SEC. 5. INCREASE OF BENEFITS FOR DEPENDENT CARE AS-
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SISTANCE PROGRAMS.
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(a) IN GENERAL.—Section 129(a)(2)(A) of the Inter-
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nal Revenue Code of 1986 is amended by striking ‘‘$5,000
18
($2,500’’ and inserting ‘‘$15,000 ($7,500’’.
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(b) EFFECTIVE DATE.—The amendment made by
20
this section shall apply to taxable years beginning after
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December 31, 2022.
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