Relyt460
Returning Member

How does unused dependent FSA funds affect taxes?

My dependent care FSA election for 2021 was $10,500. I only used $8,000. My employer allows a grace period through the end of 2022 to use the remaining 2021 funds.

 

When entering these numbers into TurboTax, it appears that I will be taxed on the $2500 carryover as income.

 

Is this correct?