Entering rollover dependent FSA information for 2021

Forum|Forum|4 years ago
January 29, 2022
2 replies
70 views

Hello

I used turbotax desktop to do my taxes in 2020 as well as this year. I imported the prior year's tax file into turbotax 2021.
Here is an issue I'm seeing - My spouse and I contributed a total of 3600 to dependent care FSA in 2020. We could only use 1800 dollars for care in 2020 due to covid. My employer allowed the rest 1800 to be carried over to 2021. This was correctly reflected in form 2441 for year 2020 (filled out by turbotax) - line14 shows a negative 1800.
For 2021, we had about $7000 child care expenses, so I was able to use up the rolled over money from 2020. There were no additional DC FSA contributions in 2021 (box 10 on w2 is empty this year). When I look at the form 2441, the part III is completely empty as turbotax has not filled in the carried over 1800 dollars from last year (on line 14). Even if I fill this information manually in the forms view, turbotax will not do the rest of the calculations in part III of form 2441. As a hack, i was able to put in 1800 in the box 10 of my w2 to get turbotax to fill out part III and calculate the correct tax. Is there a cleaner way to do this?

Best answer by BillM223

Unfortunately, if you had no FSA contributions in 2021 (i.e., no entry in box 10 on your W-2), you don't see the screen you need to see in order to enter your carryover from 2020.

Try this workaround:

1. When you enter your W-2, enter $1 in box 10. This will trigger Dependent Care processing and will reveal some different screens.

2. Enter the previous amount on the subsequent screens (like how much you spent for care, who you paid it to, etc.)

3. When you see the screen with "Did you pay for any 2020 care in 2021?", answer No (I assume you did before, too).

4. The next screen should be a screen you haven't seen before, titled "Carryover from 2020 used in 2021?" On this screen, enter your 1,800 carryover.

5. The 1,800 will now appear on line 13 and 14 on the 2441. Well, line 14 will be 1,801 because the $1 in box 10 gets added to it.

6. The rest of the 2441 will be completed, at the worst off by only a dollar. It may well be that the credit calculation (which is only a percentage of the expenses) may be the same with either 1,800 or 1,801 - I leave this for you to discover. Still being only a dollar off and getting to e-file (and get your refund MUCH faster) if probably worth it.

Note, there is a chance that the IRS may eventually realize that you altered the W-2 (remember that they got a copy of your W-2 and can compare) and send you a letter. Be sure to write down what you did and why (it was the only way to workaround the software), so that you can respond to that letter - it one ever comes.

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BillM223

Level 15

"There were no additional DC FSA contributions in 2021 (box 10 on w2 is empty this year)."

So you were not automatically directed to the section on Child and Dependent Care Credit the first time you went through TurboTax? This is why (I imagine) TurboTax did not complete things.

What you needed to do is to go to the "Child and Dependent Care Credit" section under "You and Your Family" in Deductions & Credits. If there is no entry in box 10 on your W-2, this is how you have to do this section so that you will have a chance to have 2441 completely correctly.

BUT before you do that, please remove any entries from box 10 AND remove any edits you did in Forms mode.

Start fresh for this section.

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pineapple32Author

Level 2

Hello Bill

Thank you for you guidance. I updated the software and went back in again into the child and dependent care credit section (under you and your family). Other than the regular questions about dollars spent etc, the only thing it asks is "did you pay for any 2020 care in 2021?" and then the questionnaire ends once you answer no. It does not ask whether you rolled over any dependent care FSA amounts from 2020 to 2021 tax year.

Just to clarify, I finished my taxes using the interview mode > I went into the forms view as a final cross-check before filing and discovered the error. Any edits I eventually made on box 10 or forms mode were made on a backup tax file and discarded at the end of the session. Do you have any suggestions?

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pineapple32Author

Level 2

Thank you for pointing me in the right direction. I was able to get the issue fixed by putting 1 cent in box 10 of my imported W2. That way, the part III of the 2441 gets filled out by turbotax and the total amounts received as an employee (line 12 of 2441) remains zero. I hope this will keep the level of discrepancy at the IRS level to a minimum.

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BillM223Answer