In 2019, we used $3,500 DCFSA and carried forward $1,500 to 2020.
In 2020, we had qualified expenses of $6,000 and used the $1,500 carried over from 2019 (during the grace period) plus an additional $4,500 from DCFSA 2020 ($5,000 contributed). We carried forward $500 to 2021.
Our 2021 qualified expenses will be more than $7,000.
It seems for 2020, we are having excess $1,000 taxed as non-w2 wages? Is $5,000 the limit which can be distributed in any one year including the amount carried over from the previous year?
