Non-custodial, biological parent has an FSA account for our children which was used for his portion of the child care in 2016. However, I claimed both children as dependents since I had them more than 50% of the time and all documentation shows that I paid for their expenses. His tax return was flagged because "someone else claimed childcare expenses for one of the kid's social security number and that conflicts with the 5,000 in pretax income in child care FSA he has" and he wants me to talk to my CPA on how to fix it. I believe this is his issue to fix, not mine.
edit: His argument is that the children lived with him at least 50% of the time in 2016 since we were together for 11 months of that year. However, we agreed in the beginning of that year that I would claim HoH, child care credit, etc since we both had similar incomes. I had primary custody the last month of 2016.
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Yes, it is his issue. He can't claim a tax break using an FSA unless the child(ren) physically live with him more than half the year, no matter what agreements you might have regarding sharing the dependent exemption and child tax credit. (The dependent exemption and child tax credit can be released to the non-custodial parent if your agreement calls for that, but only the custodial parent can use a dependent care FSA.)
The income gets added back to his taxable income on line 7 and he pays regular income tax on it. Fortunately there is no additional penalty.
Yes, it is his issue. He can't claim a tax break using an FSA unless the child(ren) physically live with him more than half the year, no matter what agreements you might have regarding sharing the dependent exemption and child tax credit. (The dependent exemption and child tax credit can be released to the non-custodial parent if your agreement calls for that, but only the custodial parent can use a dependent care FSA.)
The income gets added back to his taxable income on line 7 and he pays regular income tax on it. Fortunately there is no additional penalty.
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