Planning to use Dependent care FSA to pay Non-US Relative for Child Care Expenses

[DoubleDee]

Unfortunately my spouse will be having surgery soon and the only one available to take care of our child during the surgery and recovery is a relative that will be flying in from Canada to help take care of our child. 

That being said, I do have an FSA set up at work for dependent care expenses.  From documentation from work, travel expenses incurred for bringing a caregiver to a child/spouse is an eligible expense.  However, how does that play out when I do my taxes, and the person I am naming does not have a US tax ID, or file taxes in the US? 

Form 2441 requires me to identify the care giver information, including SSN/EIN.  Can I still claim this as a valid expense without being penalized?

[Critter-3 · Accepted solution]

Read the form 2441 instructions AND ask your FSA provider what their rules are :

Line 1

Complete columns (a) through (d) for each person or organization that provided the care. You can use Form W-10, Dependent Care Provider's Identification and Certification, or any other source listed in its instructions to get the information from the care provider. If you don't give correct or complete information, your credit (and exclusion, if applicable) may be disallowed unless you can show you used due diligence in trying to get the required information.

If you have more than two care providers, attach a statement to your return with the required information. Be sure to put your name and social security number (SSN) on the statement. Also, enter "See Attached" right above the Caution under line 1.

If you had neither a qualifying person nor any care providers for 2019, and you are filing Form 2441 only to report taxable income in Part III, enter "none" on line 1, column (a).

Due Diligence

You can show a serious and earnest effort (due diligence) to get the information by keeping in your records a Form W-10 completed by the care provider. Or you may keep one of the other sources of information listed in the instructions for Form W-10. If the provider doesn't give you the information, complete the entries you can on line 1. For example, enter the provider's name and address. Enter "See Attached Statement" in the columns for which you don't have the information. Then, attach a statement to your return explaining that the provider didn't give you the information you requested.

Columns (a) and (b)

Enter the care provider's name and address. If you were covered by your employer's dependent care plan and your employer furnished the care (either at your workplace or by hiring a care provider), enter your employer's name in column (a). Next, enter "See W-2" in column (b). Then, leave columns (c) and (d) blank. But if your employer paid a third party (not hired by your employer) on your behalf to provide the care, you must give information on the third party in columns (a) through (d).

Column (c)

If the care provider is an individual, enter his or her SSN. Otherwise, enter the provider's employer identification number (EIN). If the provider is a tax-exempt organization, enter "Tax-Exempt" in column (c).

U.S. citizens and resident aliens living abroad.

 

If you are living abroad, your care provider may not have, and may not be required to get, a U.S. taxpayer identification number (for example, an SSN or EIN). If so, enter "LAFCP" (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number.

[Carl]

@DoubleDee basically, the foreign care provider (from canada as I understand it) simply needs to apply for an ITIN.  But I'm questioning if they would be required to issue them a  1042-S as a household employee. The fact that the "employee" is a relative may also raise issues, but I'm not sure on that.

The last paragraph of your post just doesn't apply, because the care is not being provided "abroad". it's being provided in the U.S. Makes me wonder if it would be better to send the child to canada for the duration. That could be a problem with school though.