Question

Salary on W2 (DCB), FSA can not claim expense

Forum|Forum|5 years ago
May 2, 2021
1 reply
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Hello,

We are reporting as married jointly. I did not work last year and report my husband's W2 income. We have 3 young kids.

On the 1040 form box 1, the wage amount included the FSA amount and marked 'DCB'. On the child and dependent care credit section, I could not enter the expense to offset the $5000 FSA ( to form 2441). It said our income is too high to be qualified? and not allow me to enter the actual spending (which is more than $5000) to offset the $5000.

However, on the ' Child and Other Dependent tax credit' section, it shows $6000.

I thought the $5000 is non-taxable. But is it taxable for 2020 over a certain income amount?

So if have a child and other dependent tax credit, then FSA amount will be taxable?

thanks

TurboTax Home & Biz Windows

ColeenD3

The Child Care Credit is meant to provide working families with a tax break. If one spouse doesn't work, there is no credit. The IRS position is that if you stay at home, you can care for your child.

O

onemomentAuthor

Thank you!

Child and dependent care credit: Since I did not work, we cannot get this credit, then I can not enter the expenses for the FSA ($5000)? So the FSA $5000 will be taxable?

Turbotax gave me an error if I tried to fill up Form 2441. So I should clear or remove form 2441, right?

On the ' Child and Other Dependent tax credit' section, it shows $6000. So this is a different tax credit we can receive, no matter if both working or not.

O

Opus 17

Employee

@onemoment wrote:

Thank you!

Child and dependent care credit: Since I did not work, we cannot get this credit, then I can not enter the expenses for the FSA ($5000)? So the FSA $5000 will be taxable?

Turbotax gave me an error if I tried to fill up Form 2441. So I should clear or remove form 2441, right?

On the ' Child and Other Dependent tax credit' section, it shows $6000. So this is a different tax credit we can receive, no matter if both working or not.

You will need to delete form 2441. The $5000 dependent care benefit will be added to your taxable income on line 1 of form 1040 with the notation "DCB" next to the income amount, but there is no additional penalty for using the money in a non-qualified way.

Separately, there is a child tax credit that is $2000 for each child dependent under the age of 17 and $500 for each dependent age 17 or older. It doesn't have anything to do with child care, you are eligible as long as at least one parent works and you claim qualifying dependents.