credit

[MMG47]

where do I enter dependent care benefits to carry forward to 2021

[DavidD66]

The COVID relief bill passed in 2020 allows up to a 12-month grace period for employees to incur new expenses and submit claims against unused accumulated funds for plan years ending in 2020 or 2021 for healthcare and dependent care FSAs.

Let's say you contributed $5,000 to your Dependent Care FSA, but only spent $3,500 on Dependent Care.

Enter the $5,000 in box 10 on your W-2 (I assume that it is already there) for your 2020 tax return..

Then, when you are asked in the Dependent and Child Care credit section how much you actually spent in 2020, enter the $3,500.  

When you enter your tax year 2021 return (i.e., next year), you will be asked if you made any payments from the 2020 FSA funds carried over to 2021.  You will enter the $1,500 (or the amount you actually spend from the carryover amount).

TurboTax will complete the form 2441 accordingly.

[Edited 03-15-2021]

[MMG47]

My employer allows me to carryover an unused amount.  How do I get this on line 14.

[DavidD66]

After entering the amount in box 10 of your W-2, and then entering the amount you actually spent in the Dependent and Child Care Credit section, the difference (the unused amount) should flow through to line 14 of Form 2441.

[amyt0429]

I followed all the tips in your post, but TurboTax is not picking up the unused portion on line 14 of Form 2441. It's still picking it up as taxable income to me. Any suggestions?

[BillM223]

In the screens immediately after entering your W-2, because TurboTax sees your entry in box 10, it asks you about child and dependent care. 

So, answer Yes to having an FSA for dependent care (you do, right?), and then on the next screen, enter the amount that you carried over to 2021 ("Any leftover money from your Flexible Spending Amount?").

It's counter-intuitive, but you enter this in the W-2 screens, not the 2441 (Child and Dependent Care section).