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2020 childcare FSA payment deemed ineligible by work due to COVID

While most summer camps for 2020 cancelled and refunded fees, I had one camp that went "virtual" and would not issue a refund.  I am not able to get reimbursed by my work's childcare FSA because the summer was considered an ineligible time for child care due to COVID.  My work is rolling over any unused funds from 2020 to 2021.  I am not sure how to complete my taxes.  Should I list this virtual camp as a child care provider under the deduction section?  Or should I remove it?

 

Thank you.

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1 Best answer

Accepted Solutions
BillM223
Expert Alumni

2020 childcare FSA payment deemed ineligible by work due to COVID

"My work is rolling over any unused funds from 2020 to 2021."

 

Check with your HR department to find out how your employer has updated its rules for the Dependent Care FSA.

 

Normally, the carryover period for FSA funds was limited to 2 1/2 months (so already expired) and that was only if your employer wrote it into their plan.

 

However, with the pandemic, there have been a number of updates that allow employers to adopt new rules for 2021 that will benefit employees. See IRS Newsroom. So go ask what your company has done.

 

"Should I list this virtual camp as a child care provider under the deduction section?"

 

It depends. I have not found guidance that says that parents in this case can still claim the virtual daycare as a valid child care expense. However, what you may be able to do (depending on your employer's updates to their FSA program) is stop your FSA contributions this year, and use the carryover FSA funds from 2020 to pay for those expenses this year. If so, you won't have to worry about justifying your 2020 expenses by reporting that vendor, because you would use the expenses in and for 2021.

 

Anyway, start with your employer's HR department - you can't be the first person to wonder about this.

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2 Replies
BillM223
Expert Alumni

2020 childcare FSA payment deemed ineligible by work due to COVID

"My work is rolling over any unused funds from 2020 to 2021."

 

Check with your HR department to find out how your employer has updated its rules for the Dependent Care FSA.

 

Normally, the carryover period for FSA funds was limited to 2 1/2 months (so already expired) and that was only if your employer wrote it into their plan.

 

However, with the pandemic, there have been a number of updates that allow employers to adopt new rules for 2021 that will benefit employees. See IRS Newsroom. So go ask what your company has done.

 

"Should I list this virtual camp as a child care provider under the deduction section?"

 

It depends. I have not found guidance that says that parents in this case can still claim the virtual daycare as a valid child care expense. However, what you may be able to do (depending on your employer's updates to their FSA program) is stop your FSA contributions this year, and use the carryover FSA funds from 2020 to pay for those expenses this year. If so, you won't have to worry about justifying your 2020 expenses by reporting that vendor, because you would use the expenses in and for 2021.

 

Anyway, start with your employer's HR department - you can't be the first person to wonder about this.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

2020 childcare FSA payment deemed ineligible by work due to COVID

Thank you.

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