For the Child and Dependent Care Credit, should I exclude expenses paid by an FSA rollover?

[shelldigity]

Much of the expenses I paid in child care were paid for by an FSA rollover.  These funds aren't included on my W-2 because they're all from a previous year.  Should I reduce the amount I'm reporting by the amount paid via the FSA?

[CatinaT1]

Yes. You can not claim the Dependent Care Credit with money that has already received tax benefit from an FSA.

You are limited to $3,000 of qualified expenses for one child or $6,000 for two or more children when you use the Dependent Care Credit. 

If you used FSA funds in amounts greater than the $3000/$6000 limits, there is no expense to use for claiming the Dependent Care Credit.

[shelldigity]

Thank you for your response.  I'm a little confused about how to proceed.

In the TurboTax product, when entering the dollar amount for total dependent care expenses, it says "Be sure to also include money paid from a Flexible Spending Account (FSA) or cafeteria plan." 

However, if I include the costs I paid with an FSA, it appears to be giving me a credit based on the total amount I paid in expenses, which seems incorrect.  I'm never asked to provide how much FSA funds rolled over.

Due to the increased contribution amounts in 2021 and relaxed rollover policies for 2022, I carried over more than $9000 in my FSA and did not contribute any more to it in 2022.  I did still have to pay for some expenses out of pocket.  Am I understanding correctly that because the $9000 paid via FSA rollover is more than the $3000 credit allowed for one child, I am not eligible for the credit and should not enter those expenses at all, despite the instructions to do so?  Removing it entirely also impacts my Massachusetts state refund.

[MarilynG1]

Yes, you are not eligible for the Child Care Credit.  If $3,000 was paid by your rollover FSA funds, 'you' did not pay for child care in 2022, so say NO to the question 'Did you have Dependent Care Expenses'  in TurboTax.