Dependent care benefit

[Justine]

My husband and I are unmarried with two kids. I have always claimed the children and head of household. Both kids are on medicaid and would not qualify if both of our incomes were counted. I have a dependent care FSA set up with my employer for our oldest. This year our youngest entered daycare so my partner set up an FSA through his work. Does he now have to claim the child on his taxes? Is there anyway to pay taxes on that previously untaxed income so that I can still claim both kids?

[Critter]

Tell him to discontinue this practice.

[Hal_Al]

You only need to claim one child to be head of household. You should look closely at him claiming one of the children and the the tax free FSA. You can use this tool to compare alternative filing scenarios: <a rel="nofollow" target="_blank" href="https://turbotax.intuit.com/tax-tools/calculators/taxcaster/?s=1">https://turbotax.intuit.com/tax-to...>

[Critter]

Medicaid issues may arise.

[SweetieJean]

"My husband and I are unmarried"  Then he is not your husband.

[SweetieJean]

As Critter, said, "Medicaid issues may arise."  See Q7 here:
<a rel="nofollow" target="_blank" href="http://www.thesoutherninstitute.org/burden-atapplic.asp">http://www.thesoutherninstitute.org/burden-...>

[Hal_Al · Accepted solution]

Q . Does he now have to claim the child on his taxes?

A. No. But the FSA DCB (dependent care benefit) will be taxable on his return if he doesn't claim it.

Q.  Is there anyway to pay taxes on that previously untaxed income so that I can still claim both kids?

A. Yes, it's automatic in TurboTax on his return. The FSA  will be in box 10 of his W-2. When he doesn't claim a child dependent and day care expenses; TurboTax will add the box 10 amount to his wages and put it on line 7 of form 1040 (or 1040A) with the notation DCB

You only need to claim one child to be head of household. You should look closely at him claiming one of the children and the the tax free FSA. You can use this tool to compare alternative filing scenarios: https://turbotax.intuit.com/tax-tools/calculators/taxcaster/?s=1

[SweetieJean]

Does your Partner live with you?  "I have always claimed the children and head of household."  In order to file HOH, you must have provided more than 50% of the support for the entire household (including a resident Partner) for the entire year.