Like many we did not use our dependent care FSA in 2020 but my wife’s company will allow the FSA contribution to carryover into 2021. We received information from our tax preparer that we will be responsible for the unpaid taxes on the $800 contributed to the FSA in 2020.
I was told this is because the tax forms require us to input what the dependent care FSA money was spent on in 2020 and if it wasn’t spent, it is considered taxable income.
Is the correct? Every year we have carryover from the health care FSA and have never owed taxes on that so I don't see why the dependent care would be different. Thanks!
