A green card holder is considered a US resident for tax purposes, even if they did not live in the US. In this case, it sounds like the mother lived in the US for nine months of 2019 and for most of 2020, which would make them a US resident even without a green card.
The taxpayer can claim their mother as a dependent if the mother’s taxable income is less than $4200 (for 2019, the figure is probably a bit higher for 2020) and the taxpayer paid more than half his mothers‘s support.
If the taxpayer can claim his mother as a dependent, then she is not an eligible care provider for a dependent care account, even if he doesn’t want to claim her.
This creates a possible loophole. If the taxpayer paid their parent more than $4200 (or whatever the amount for 2020 will be, probably $4250 or $4300), then the parent can no longer be claimed as a dependent and the parent would be eligible to be a qualifying child care provider. I don’t think this is the intent of the law, but I am not aware of anything that bars it. This taxpayer wants to pay their parent $2500 from their flexible care account; if they paid their parent an additional $1800 out of pocket, to bring the parent‘s wages over the threshold, then they would not claim their parent as a dependent and could use the flexible spending account. They lose the $500 dependent credit for their parent, but they would not have to forfeit the $2500 in the flexible spending account.
Another option would be to claim reimbursement from the flexible spending account anyway and pay the parent the $2500. At tax time, the the use of the flexible spending account will be disallowed because the expense is not qualified (the caregiver is a dependent), and the $2500 will be added back to their taxable income as wages. But there is no penalty, and this may be better than forfeiting the money entirely. (This is probably technically improper, because the taxpayer has to certify to the FSA trustee that the expenses are qualified, but I think there is a low risk of getting caught.)
Finally, the IRS has relaxed the rules on flexible spending accounts for 2020 due to the coronavirus. If the employer wishes to allow it, a taxpayer may cancel their enrollment in their dependent account midyear, even though the usual conditions for canceling such an account are not met. The employer does not have to allow midyear cancellations, and any money already in the account must remain in the account to be spent on qualified care. There is also an extended carryover provision that will allow a taxpayer to carry unspent funds from 2020 over into 2021. If the account is being funded by equal contributions from each paycheck, and if the employer allows midyear cancellations, this taxpayer might be able to stop any more money going in the account, so they would have less to spend out before the end of the year.
https://www.irs.gov/pub/irs-drop/n-20-29.pdf
