Non-custodial, biological parent has an FSA account for our children which was used for his portion of the child care in 2016.

Forum|Forum|7 years ago
June 6, 2019
2 replies
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Non-custodial, biological parent has an FSA account for our children which was used for his portion of the child care in 2016. However, I claimed both children as dependents since I had them more than 50% of the time and all documentation shows that I paid for their expenses. His tax return was flagged because "someone else claimed childcare expenses for one of the kid's social security number and that conflicts with the 5,000 in pretax income in child care FSA he has" and he wants me to talk to my CPA on how to fix it. I believe this is his issue to fix, not mine.

edit: His argument is that the children lived with him at least 50% of the time in 2016 since we were together for 11 months of that year. However, we agreed in the beginning of that year that I would claim HoH, child care credit, etc since we both had similar incomes. I had primary custody the last month of 2016.

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Best answer by Opus 17

Yes, it is his issue. He can't claim a tax break using an FSA unless the child(ren) physically live with him more than half the year, no matter what agreements you might have regarding sharing the dependent exemption and child tax credit. (The dependent exemption and child tax credit can be released to the non-custodial parent if your agreement calls for that, but only the custodial parent can use a dependent care FSA.)

The income gets added back to his taxable income on line 7 and he pays regular income tax on it. Fortunately there is no additional penalty.

Critter

Level 15

Generally, only the custodial parent is eligible to claim the following tax breaks:
• the dependent's personal exemption
• head of household filing status (if applicable)
• child and dependent care tax credit ***
• child tax credit and additional child tax credit
• earned income tax credit, and
• exclusion for dependent care benefits

However, the custodial parent can waive his or her right to claim a dependent in favor of the non-custodial parent. The non-custodial parent would then be able to claim:
• the dependent's personal exemption,
• child tax credit and additional child tax credit, and
• tuition and fees deduction or the education tax credits

Opus 17

Answer

Level 15

The income gets added back to his taxable income on line 7 and he pays regular income tax on it. Fortunately there is no additional penalty.

jpowers28Author

Level 2

His argument is that the children lived with him at least 50% of the time in 2016 since we were together for 11 months of that year. However, we agreed in the beginning of that year that I would claim HoH, child care credit, etc since we both had similar incomes. I had primary custody the last month of 2016.