Tax impacts of funding multiple DCFSA accounts

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PowderDay9
Posts: 1001
Joined: Fri Oct 12, 2018 12:29 pm

Tax impacts of funding multiple DCFSA accounts

Post by PowderDay9 »

Open enrollment is coming up soon and I'm considering funding 2 dependent care FSA accounts $5k each for 2022. We'll have well more than $10k in eligible childcare expenses. What are the tax impacts/penalties if we fund $10k and it turns out the limit was only $5k? Is this just extra tax paperwork at filing time?

Some more background. For 2021 I only funded 1 DCFSA account at $5k. Early in 2021, the $5k allowable limit was increased to $10.5k. Our employers wouldn't allow us to increase the contribution or open a new DCFSA mid-year. We're in a high federal tax bracket so I'm trying to explore options for 2022 in case the $10.5k limit happens again.
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theRoCK
Posts: 111
Joined: Wed Jul 29, 2020 5:40 pm

Re: Tax impacts of funding multiple DCFSA accounts

Post by theRoCK »

It seems like any amount over the limit for the year would be accounted for as additional taxable income in form 2441 which is used to calculate dependent care tax credit, and apparently tax software should take care of it automatically, at least, Intuit claims theirs does.

https://ttlc.intuit.com/community/tax-c ... /00/715229
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