Dependent care fsa carryover

[awbaldi]

MFJ and in 2024 we had $5000 of depedent care fsa deduction on our W2. we were only able to use $500 in 2024. in 2025 we incurred and spent the remaining $4500 during the grace period as well as the additional $3000 2025 depedent care fsa deduction. on our 2024 taxes we still the 500 was deducted and the 4500 was taxable. i was expecting that to show up as deductible along with the additional $3000 this year. instead on form 2441, line 12 is 3000, line 13 is 4500, line 14 is 0 and line 15 is 7500. Looking down farther, line 24 is 0 due to no sole proprietorship or partnership, line 25 is 5000 (the annual max) and line 26 is 2500. It seems I'm being double taxed on the 2024 carry over. (once in 2024 and now partial in 2025). is the only solution to this to say that i carried over 2500 into 2026 and limit myself to 5000 new contributions? (2026 has new 7500 limit)

[Bsch4477]

The funds spent during the grace period in 2025 apply to the 2024 return so should have been reported on the 2024 return and so not taxed on that return. 

[awbaldi]

Interesting. It would be nice for TurboTax to potentially ask about the grace period specifically. In 2024, it just asks how much was paid "in 2024". TurboTax says not to include "expenses incurred in 2023, 2025 expenses you prepaid in 2024, or expenses you paid in 2025, even if they were for 2024". That last line is very ambiguous. I could be if you paid for the last week of December in January, do not include it. Or if you paid for expenses in 2025 during the grace period for 2024, do not include it.

2025 turbotax explicitly asked about carryover from 2024 and says this includes the amount used during the grace period.