Claiming full dependent care tax credit by rolling over fsa childcare account

[Yankfanros]

. I realized too late that I would’ve been better off in 2021 not contributing $10,500 to a childcare flexible savings account and taking the full childcare tax credit instead. I haven’t submitted a claim yet for 2021 flex savings funds. My plan allows me to rollover unspent 2021 childcare flex savings funds to 2022 and then submit a claim until April 2023. Is it possible for me to claim the full childcare tax credit by not submitting any claims for flex savings funds spent on 2021 childcare (and use the $10,500 on 2022 childcare expenses instead)? It seems like the answer is yes based off TurboTax questions. 

So from what I’ve read online double dipping refers to “The same eligible expenses that are reimbursed through a Dependent Care FSA cannot also be counted as eligible expenses to claim the Dependent Care Tax Credit.”…since I’m not getting reimbursed for dependent care 2021 I imagine it’s not a double dip. In 2022 I’ll use my 2021 fsa funds and not claim tax credit.

TurboTax seems to be onboard with this approach since it asked how much of my 10,500 2021 fsa funds were unspent and I listed all which then gave me the full tax credit

[JillS56]

No, the FSA funds are reported in Box 10 of your W-2, when you go to report those funds it is going to credit the amount of Box 10 to your child care expenses for 2021 and then any remaining balance can be elected to be carried forward to 2022.   You cannot elect to carry the full amount over to 2022 and then take a child care credit for 2021.    

If you show $10,500 on your W-2 in Box 10 and you have child care expenses for 2021.   Then you are going to have to report those on your 2021 return.   I would request a refund from your FSA for your 2021 child care expenses.  Since you are only going to be able to carry forward the excess of your FSA amount in Box 10 and your actual child care expenses for 2021.

[Yankfanros]

So TurboTax asks how much of my fsa funds I used for 2021, if I enter 0 then TurboTax gives me the full childcare tax credit. Then TurboTax gives me the full childcare tax credit based off what I enter on the deductions section for childcare expenses , so clearly TurboTax knows I have a fsa fund , I chose to not use it despite childcare expenses and then calculated the childcare tax credit …is there a source saying you need to use your fsa funds before claiming a childcare tax credit?

[JillS56]

You might want to read this article.   My reading says that you cannot do what you are doing.   IRS Bulletin - Guidance on Care Care Credit and Carry over

I have asked for some clarification.