Welcome to our newest reader question series where we feature an inquiry submitted by the MoneyNing community, along with our answers. Today’s question relates to Flexible Spending Accounts and dependent daycare expenses.
My wife’s company offers a Dependent Daycare FSA (Flexible Spending Account) so we contributed $5,000 to it this year. But we forgot to submit our receipts on time for the nearly $8,000 of expenses we paid to daycare out of this account. Is this money completely lost?
Also, when filing our taxes, we’re not getting child care benefits as it says we should have from the Dependent Daycare FSA. I feel like I’m losing from both sides, since I can’t get my contribution to the FSA back, and am not getting child care benefit on our taxes.
Thanks for your time on this.
I’m not 100% certain, but I believe it’s a use it or lose it rule unfortunately. You may want to double check with the administrator though. Another idea, if it helps any, is to ask if you can still submit 2013 receipts towards 2014 contributions. This will help, assuming you did not already use up the full amount in 2014.
Also, and I’m not a tax professional so this situation warrants one that can get behind the idea, but I would see if it’s possible to file an amended return for the tax returns where you didn’t file for the child care credit, since you didn’t end up getting reimbursed.
I believe the IRS is reasonable. In your case, you got no benefit from the contribution, so it can be reasoned that you’re eligible for the deduction. Of course, again, I’m not a tax professional. So you should talk with one to see if this stance is defensible, but I would at least prose the idea to the tax guy.
David Ning, founder MoneyNing.com
What Do You Think?
Do you have any additional thoughts or ideas about how a Dependence Daycare FSA works? I don’t claim to be an expert, though the nature of my business allows me to think and understand money matters on a more complicated level.
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