Hello,
Thanks for all the great advice on this thread. I'm trying to better understand the way the dependent care FSA works to ensure I'm compliant with all tax rules. This is the first year my kids have not been in a daycare facility due to a recent move. My mom has been helping for several months with the kids care while my husband and I work from home.
She is married, retired and only obtains social security income, in addition to what we've been paying her. Our company allows for $5k/yr of dependent care FSA reimbursement. As she's considered my "employee" per the definitions below (since she's working at our home), am I obligated to provide her a W2? Her reimbursement of $5k should keep her well below the threshold of requiring to file, but are there other implications I'm unaware of if we submit for reimbursement of the $5k at the end of the year. My brother currently claims my parents as dependents. Would they be ineligible for that next year? thanks in advance!
