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qdklhl
Level 1

How does TurboTax calculate "forfeited" dependent care benefits?

In 2019 but I contributed $5000 pre-tax to a Dependent Care FSA. Because my wife didn't work in 2019, I believe that Form 2441 should show a taxable benefit of $5000. Instead, it only shows $700 because TurboTax says that we "forfeited" $4300 (as indicated on line 14). It's not clear how TurboTax came up with this number. In reality, we ended up getting reimbursed for nearly the full $5000.

 

Has anyone else had a similar experience with TurboTax generating seemingly random "forfeitures"?

 

(FYI, all numbers have been rounded to the nearest 100).

1 Best answer

Accepted Solutions
BillM223
Employee Tax Expert

How does TurboTax calculate "forfeited" dependent care benefits?

When you saw the question in your W-2 interview that asked "Any leftover money from your Flexible Spending Account?" what was your answer?

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5 Replies
KathrynG3
Employee Tax Expert

How does TurboTax calculate "forfeited" dependent care benefits?

Please revisit the input for this area. You do not appear to qualify to claim any benefit. Any amount removed from an employee sponsored, pre-tax dependent care spending account would theoretically be included on your Form W-2.

 

The IRS rules for the Child and Dependent Care Credit require you to only benefit from expenses paid that were not reimbursed. 

 

The amount paid into a spending account with pre-tax dollars can be excluded from your income, however, only childcare expenses exceeding that contribution can be claimed for purposes of the Child and Dependent Care Credit.

 

 

For more details, see the following resources:

What is the Child and Dependent Care Credit?

Video: What is Form 2441?

Filing Form 2441

2019 Instructions to Form 2441, Child and Dependent Care Credit, and

2019 IRS Publication 503, Child and Dependent Care Expenses.

qdklhl
Level 1

How does TurboTax calculate "forfeited" dependent care benefits?

Thanks for your response.

 

My W-2 does indeed correctly indicate a dependent care benefit of $5000 (in box 10) corresponding to our Dependent Care FSA contributions. I've also revisited the "Child and Dependent Care Credit" section of "Deductions and Credits". It correctly shows that we paid over $5000 to a childcare provider in 2019 and that my wife was not a full-time student and could care for herself.

 

It's still a total mystery as to why TurboTax thinks that we've forfeited $4700 of our DFSA contribution.

BillM223
Employee Tax Expert

How does TurboTax calculate "forfeited" dependent care benefits?

When you saw the question in your W-2 interview that asked "Any leftover money from your Flexible Spending Account?" what was your answer?

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

View solution in original post

qdklhl
Level 1

How does TurboTax calculate "forfeited" dependent care benefits?

Ah! That was it - I somehow missed that question the first time around.

 

Thank you!

BillM223
Employee Tax Expert

How does TurboTax calculate "forfeited" dependent care benefits?

Glad you found it!

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