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What You Can Do to Protect Your Dependent Care FSA Cash

December 11, 2020, The Wall Street Journal

Michael Chittenden is quoted in The Wall Street Journal regarding the options for excess FSA dependent-care spending. Mr. Chittenden says the best option is to find expenses to claim. There are strict limits on what expenses the IRS considers eligible, and employers and plan administrators don't have flexibility to alter the rules. Most importantly,  expenses must have been incurred in order to allow time to work. And if  married, a spouse must be working as well or otherwise unable to care for dependents while the FSA recipient is  working, he adds.

According to Mr. Chittenden, if a person or bus service is paid to bring your child from school to their after-school program before school closures, the expense is eligible. So are costs incurred if an elderly parent is brought home to live because of the pandemic and paid an aide to care for them while you work. During the pandemic, many people relied on family members to provide care. Mr. Chittenden stated that those payments can be claimed if a relative watched a child and was not a dependent (such as an older child). Also, the relative should report the payments they received from  as income on their taxes.

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