Small Business Dependent Care FSA Opportunity Act

Summary

Creates a new nonrefundable business tax credit to help small employers cover startup costs for establishing dependent care flexible spending accounts (FSAs). The credit reimburses qualifying startup and education expenses for up to three years after a plan's first credit year, subject to per-participant and total caps, and is available only to employers that did not maintain a substantially similar dependent care FSA for the same employees in the prior three taxable years.

• Creates a nonrefundable business tax credit for qualified startup costs of dependent care FSAs for eligible small employers.
• Credit is available only for the first credit year and the two immediately following years (three years total).
• Annual credit limit equals the qualified startup costs but is capped at the greater of $500 or the lesser of $250 per non-highly-compensated eligible participant or $5,000.
• Employers that had a substantially similar dependent care FSA for substantially the same employees in the prior three taxable years are not eligible.
• Qualified startup costs include expenses to establish/administer the plan and employee education, but exclude costs if no non-highly-compensated eligible participant exists.
• Credit is nonrefundable and claimed as part of the general business credit on the employer's tax return.
• Applies to costs paid or incurred after enactment for taxable years ending after enactment.
• Contains rules similar to existing startup-credit mechanics for allocation and timing of costs.