Choose to forfeit Dependent Care FSA deduction?

[shermath]

I put $5,000 into a dependent care FSA during 2021 (and had it reimbursed). The changes that were made to the Dependent Care Tax Credit partway into 2021 make the credit better for my family. Can I elect to pay taxes on the $5,000 I had deducted, and take the credit based on the full $8,000 (instead of $3,000)?

Note: I had one child in daycare, and expenses exceeded $8,000.00.

Thank you!

[JillS56]

If the dependent care funds are in box 10 of your W-2 or a carryover from last year, you cannot forfeit the money to get the dependent care.   If the dependent care is more than the amount of your FSA then you can claim dependent care on the amount over the amount of FSA funds.   So the $5,000 will be applied and then you could possibly get 50% of the balance of $3,000.   

My recommendation is to enter the dependent care information and see what TurboTax calculates for you.    On the Form 2441 Line 12 is going to be the amount of FSA funds in Box 10 of your W-2 for 2021 (if blank, then there were none), Line 13 will be the amount you carried over from 2020, and then Line 14 is the amount that will be carried over to 2021, which it doe not sound like there will be anything on that Line.