I'm being told I owe money, but it's because of the FSA amount already being deducted from taxable income on my W2. The only information that I'm finding on here differs based on the law at the time of information posting. What is the up-to-date info for handling this on 2025 tax filings? (Not HSA. Not dependent care FSA. Yes, I know that I shouldn't need to report it. Yes, it is NOT listed on the W2. That's why I'm asking if there's a way to upload my last paycheck because it DOES show the deductions on there.)
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A medical FSA is not reported on your W-2 or your tax return at all. The amount should have been subtracted from your box 1 taxable wages before the W-2 was printed. Then, any medical expenses that were reimbursed from the FSA should not be included as deductible medical expenses since they were already reimbursed with tax-free money.
A dependent care FSA should be reported in box 10. That will trigger Turbotax to ask questions about your qualifying dependents, information about the care provider, and the amount of care. If your dependent care FSA is not included in your W-2 in box 10, you need to get a corrected W-2 from your employer.
Without any explanation for the $2600 that was sent to FSA, turbotax thinks I still owe taxes on the rest of what I made. I asked someone who used to do taxes. They said it was a new known issue for this year's returns. Is a fix known yet? They said they hadn't heard of one yet.
Opus pointed out that there are two different types of FSAs which are treated differently. Please tell us if you have a health care FSA (for paying medical bills) or a dependent care FSA (for paying dependent care bills). Until you tell us which one you had, we can't be sure of your issue.
Based on what you have said so far, it sounds to me that you have a dependent care FSA. As Opus asked, do you have a dollar amount in box 10 on your W-2? (My guess is yes). When there is an amount here, you have to complete form 2441 to show that this amount (or part thereof) was covered by documented spending on dependent care. Did you go to the Child and Dependent Care interview, and what questions and answers did you make there?
If you had an entry in box 10 on your W-2 and did not correctly complete the Child and Dependent Care section, this would cause the amount in box 10 on the W-2 to be added to your income, as Opus said at the end of this post.
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