Re: 2022 Dependent Care FSA Age limit change

swongtax · ‎04-03-2023

Dear All,

My client sent me this info about DCB change for 2022 (Dependent care FSA up to age 14)

I cannot find the IRS notice about this change in 2022.

Can someone please help find the IRS notice, if there is one?

Thank you!

SW

DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT

Regardless of which health plan you choose, you can elect a Dependent Care FSA. This account can be used for dependent child expenses up to the age of 13. Once your child reaches age 13, they are no longer eligible. This account is used to reimburse you for dependent care expenses, such as child day care, elder care, etc. The contribution limits for 2022 are:

$5,000 per year per household
$2,500 for married individuals filing a separate tax return

2022 IRS Changes Due to COVID-19:

Health Care FSAs – Employee may:

FOR 2022 ONLY: Carry-over of ENTIRE 2021 BALANCE into 2022 if enrolled for 2022

Dependent Care (Child Care) FSAs – Employee may:

FOR 2022 ONLY: Use funds for dependents up to age 14 (previously 13)
FOR 2022 ONLY: Carry-over of ENTIRE 2021 BALANCE into 2022 if enrolled for 2022

*Employee MUST ELECT THE FSA FOR 2022 IN ORDER TO RECEIVE THE 2021 CARRY-OVER*

Skylane · ‎04-03-2023

Pub 503

https://www.irs.gov/pub/irs-pdf/p503.pdf

edit is this what you’re looking for? https://www.irs.gov/pub/irs-drop/n-21-26.pdf

If at first you don’t succeed…..find a workaround

swongtax · ‎04-03-2023

I actually read this publication for 2022 already.

I am looking for any recent IRS Notices that might have updated the age since the Publication.

Thanks!

SW

Skylane · ‎04-03-2023

This is most recent i can find https://www.irs.gov/pub/irs-drop/n-21-26.pdf

If at first you don’t succeed…..find a workaround

swongtax · ‎04-03-2023

I appreciate your effort.

I also found this IRS notice and read through it, but I couldn't find the age limit change to 14 to substantiate the client's HR notice. Hmm....I think there might be a more recent IRS Notice out there somewhere or HR would not have posted the info to their employees.

SW

JOFI · ‎04-12-2023

Does anyone know how to correctly enter carryover DCB from 2021 into the Proseries program?

My client incurred $2,954 in qualified child care expenses and has a $1,982 carryover of unused DCB from 2021. I have entered this $1,982 amount on Line 13 in the Form 2441 worksheet, but it is doing nothing. I am just getting a standard 20% Child and Dependent Care credit, which is less beneficial than a 22% tax bracket deduction on their federal returns and a deduction on their state return.

TaxGuyBill · ‎04-13-2023

@JOFI wrote:

I have entered this $1,982 amount on Line 13 in the Form 2441 worksheet, but it is doing nothing.

What are you expecting it to do?

Does line 25 say it is excluded? If so, it seems to be working correctly.

JOFI · ‎04-13-2023

When I say it is doing nothing, it is doing nothing. No number appears on Line 25 (Excludable Benefits) and no number appears on Line 26 (Taxable Benefits).

Note that the client did not have any DCB deductions on current year W-2, so this result would be fine if there were no carryover benefits from 2021. But there is, I have entered the amount on Line 13, but nothing changes after I have done that.

TaxGuyBill · ‎04-13-2023

Interesting. ProSeries won't do it without any current year benefits. I tested it and if I enter $1 in box 10 of the W-2 for the current year, it works.

I also tried entering $1 in box 10 of the W-2, then override line 12 of the 2441 back to $0, and it still seems to work. So I think that is what I would do.