Dependent daycare claim

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I am just looking for some suggestions. I had put in $5000 in the dependent daycare account last year and I submitted my claim on 04/17. But, the claim was denied based on the last date of submission is 03/31. I kind of assumed that the last date for submission is 04/30 as it was with my previous employer and submitted it late. I know I made a mistake, but is there way I would be able to get this money back? It makes me hate myself to loose that kind of money. I have already called the administrator and requested, but no success.

Will my employer be able to do anything?

Thanks for all your suggestions..

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Yes, it is the employer who keeps the unused funds.

UtahDealSeeker (Apr. 23, 2013 @ 1:49p) |

If you don't need the FSA funds immediately, why file all the time?

I wait until I've incurred $5k in expenses (usually b... (more)

CowbellMaster (Apr. 24, 2013 @ 4:10p) |

Btw OP, I feel for you. The thought of losing $5K due to putting off faxing over a form makes me queasy. I've lost a f... (more)

CowbellMaster (Apr. 24, 2013 @ 4:13p) |

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You are out of luck. This is the downside of the FSA, use it or lose it. Legally, there is nothing that can be done.

So you waited till nearly the last possible day to submit the claim for the entire balance for the year ?

There is somewhere to claim on your taxes any monies you forfeited, so you won't be out the full $5K.

Thanks. Though I have contributed but never claimed it, would I be able to deduct on my taxes?

Treefarn said:   There is somewhere to claim on your taxes any monies you forfeited, so you won't be out the full $5K.

Ok.. I will try to find that. Thanks

Treefarn said:   There is somewhere to claim on your taxes any monies you forfeited, so you won't be out the full $5K.
This money was taken pre-tax. So OP is not out the full 5k to begin with.
I dont know the full tax implication but it is safe to say OP is not getting two deductions for the same 5k.

Treefarn said:   There is somewhere to claim on your taxes any monies you forfeited, so you won't be out the full $5K.

Actually, you OWE taxes on the forfeited amount.

karma310 said:   I am just looking for some suggestions. I had put in $5000 in the dependent daycare account last year and I submitted my claim on 04/17. But, the claim was denied based on the last date of submission is 03/31. I kind of assumed that the last date for submission is 04/30 as it was with my previous employer and submitted it late. I know I made a mistake, but is there way I would be able to get this money back? It makes me hate myself to loose that kind of money. I have already called the administrator and requested, but no success.

Will my employer be able to do anything?

Thanks for all your suggestions..


It would actually be illegal for them to give you the funds back. The use it or lose it rule is pretty specific. Well, they could give you a $5,000 unrelated bonus to be nice but this seems rather unlikely unless you have a small employeer who feels sorry for you.

vipercon said:   Treefarn said:   There is somewhere to claim on your taxes any monies you forfeited, so you won't be out the full $5K.

Actually, you OWE taxes on the forfeited amount.


That's totally correct. Basically the amount forfeited should have been taxed but was not since it was put into a pre-tax FSA account. Since it was not used for dependent care, it was still income to the employee so liable for taxes.

As a note, it's atypical for FSA plans to allow submissions past 3/15 or 3/31. Never assume and submit claims early. For this year, you're SoL though. Employer will be more than happy to use the forfeited funds to pay for future plan maintenance expenses.

OP, don't look at this as lost money. You've learned a valuable lesson about procrastination. I bet you won't have your head in your a$$ next year when it's time to submit claims. You'll probably submit your claim January 2nd from now on. This lesson you've learned will end up saving you more than $5k over your lifetime if you apply it to all areas of your life.

Shandril said:   vipercon said:   Treefarn said:   There is somewhere to claim on your taxes any monies you forfeited, so you won't be out the full $5K.

Actually, you OWE taxes on the forfeited amount.


That's totally correct. Basically the amount forfeited should have been taxed but was not since it was put into a pre-tax FSA account. Since it was not used for dependent care, it was still income to the employee so liable for taxes.

As a note, it's atypical for FSA plans to allow submissions past 3/15 or 3/31. Never assume and submit claims early. For this year, you're SoL though. Employer will be more than happy to use the forfeited funds to pay for future plan maintenance expenses.



This is not correct. There are no taxes owed on the forfeited amount unless you were single when setting up the FSA and got married to a non-working spouse which would disqualify the dependent care FSA.

Depending on income, you should be able to recoup some of that via the dependent care tax credit ( though you should have filed your taxes already ... ) What did you put on your taxes for this year ? That is typically why FSAs don't go past 4/15, because their usage needs to be recorded on your income taxes.

cowboyBill said:   This is not correct. There are no taxes owed on the forfeited amount unless you were single when setting up the FSA and got married to a non-working spouse which would disqualify the dependent care FSA.

Where did you come up with that one?
http://www.irs.gov/instructions/i2441/ar01.html
---
Line 14
If you had an employer-provided dependent care plan, enter on line 14 the total of the following amounts included on line 12.

ĽAny amount you forfeited. You forfeited an amount if you did not receive it because you did not incur the expense. Do not include amounts you expect to receive at a future date.

ĽAny amount you did not receive but are permitted by your employer to carry forward and use in the following year during a grace period.


Example. Under your employer's dependent care plan, you chose to have your employer set aside $5,000 to cover your 2012 dependent care expenses. The $5,000 is shown on your Form W-2, in box 10. In 2012, you incurred and were reimbursed for $4,950 of qualified expenses. You would enter $5,000 on line 12 and $50, the amount forfeited, on line 14. You would also enter $50 on line 14 if, instead of forfeiting the amount, your employer permitted you to carry the $50 forward to use during the grace period in 2013.
---
That then gets added back in to your taxable income.

You can recover some of the money by amending your tax return, excluding the forfeited benefits, and taking a child care credit for your qualifying expenses.

Read the Instructions to Form 2441 carefully. If you had $5K put into your DCB account and forfeited all of it, that amount is excluded from your income. It is necessary to fill out Part III of Form 2441 to exclude this money. Then, the amount you spent for which you were not reimbursed can be used for the Child Care Credit.

If you had taken the $5K out of your account and not used it for qualifying dependent care expenses, it would be taxable.

What is it with this FSA, Dep. Care use-it-or-lose-it feature? Is it supposed to cover Management costs? Sounds like highway robbery. Can't this be turned into a line item in the tax form?

Shandril said:   vipercon said:   Treefarn said:   There is somewhere to claim on your taxes any monies you forfeited, so you won't be out the full $5K.

Actually, you OWE taxes on the forfeited amount.


That's totally correct. Basically the amount forfeited should have been taxed but was not since it was put into a pre-tax FSA account. Since it was not used for dependent care, it was still income to the employee so liable for taxes.


Shandril, Prove it.

How can it be taxable to the employee, the employee never received it? The employer got to keep it.

eurekaa said:   What is it with this FSA, Dep. Care use-it-or-lose-it feature? Is it supposed to cover Management costs? Sounds like highway robbery. Can't this be turned into a line item in the tax form?

To make sure that people who deduct income for covered expenses actually incur the expenses in the year they deduct the income. It's a huge penalty but really it's not that hard to get a claim form in by the end of the year for the full 5k.

ryanstruve said:   eurekaa said:   What is it with this FSA, Dep. Care use-it-or-lose-it feature? Is it supposed to cover Management costs? Sounds like highway robbery. Can't this be turned into a line item in the tax form?

To make sure that people who deduct income for covered expenses actually incur the expenses in the year they deduct the income. It's a huge penalty but really it's not that hard to get a claim form in by the end of the year for the full 5k.


Doesn't that apply to many things on your 1040 (charitable deductions, even the 3k or less loss on stocks, dependent care, medical expenses)? If you don't keep backup info big trouble hits you during an audit. What makes the FSA/DCA unique?

I agree that DCA is not that hard to claim. Your DC expenses are often higher than 5k and proof is in one or two compact statements. I prefer delaying it atleast till January so that you send the receipt/stmts once and get the entire 5k in one check. Unlike FSA, DCA will not pay you the whole amount till the year is over.

FSA submission is more painful with many smaller receipts. Plus deciding on the initial amount (predicting your expenses for the upcoming year is often frustrating. The whole things seem like a historical artifact, from a time when keeping track of payments and reimbursements were so-difficult (ledger days?). Seriously, how difficult is it to return unused funds minus tax due. 401(k)s do it all the time when the company's 401(k) contributions are not balanced between high-earners and low-earners. The only redeeming thing about the FSA is that it's not subject to the ridiculous must-exceed-7.5% of income provision for medical expenses. Plus, FSA/DCA is available to you today even if you don't itemize.

I claim every 2 or 3 month. Since I put a little less in then the costs my current FSA balance is lower then what I claimed. They are happily sending me a check every 2 weeks when my next paycheck hits. My claim process is now online so its really not a big deal doing it during the year. Even mailing it in every 3 month or so is not a big deal.

I'm thinking that for every OP there's also someone that leaves the company before the end of the year but claims the full FSA amount w/o contributing all of it.

susrivas said:   I'm thinking that for every OP there's also someone that leaves the company before the end of the year but claims the full FSA amount w/o contributing all of it.

You can claim up to the full amount only for the FSA. AFAIK you can't do the same with Dep. Care account (which is what the OP was talking about.)

eurekaa said:   What is it with this FSA, Dep. Care use-it-or-lose-it feature? Is it supposed to cover Management costs? Sounds like highway robbery. Can't this be turned into a line item in the tax form?

This is the way I have always viewed it. Kinda on the same lines as Mail In Rebates. The administrator (usually your insurance provider) makes money on the non filers. That is why so many of them make the filing process so tedious -- paper copies, snail mail etc.

OP, you may want to write a pleading letter to them why your submission was delayed because you were out of the country, stuck in war, or a natural disaster -- but don't keep your hopes up.
Good Luck!

GermanExpat said:   I claim every 2 or 3 month. Since I put a little less in then the costs my current FSA balance is lower then what I claimed. They are happily sending me a check every 2 weeks when my next paycheck hits. My claim process is now online so its really not a big deal doing it during the year. Even mailing it in every 3 month or so is not a big deal.

This is the way to go. We do the same and get a deposit every 2 weeks.

I don't understand - you are complaining about money lost - but on the other hand you were KIND OF paying double the amount for childcare expenses. Double because - deduction from paycheck for FSA and actual money you would pay the daycare. What I fail to understand is - don't you pay the day care on a weekly/monthly basis? Why didn't you file for FSA claim as you kept paying Daycare fees on a weekly/monthly basis. Late or not, why would you wait to get re-imbursed(for lack of term) for the entire year?

Sometimes we have to pay for our own negligence. In any case, I would write a written appeal to your FSA company (whichever one your employer appointed) to seek a one time forgiveness and see if they might take pity on you. Sometimes, they do - if it is a valid reason. Also, there is a deadline to apply for that as well. I am not sure what it is. Call them. I have used that once for a small amount because I had to travel for emergency reasons and my last claim was late by a week. I do recall the CSR telling me that I have to send in a written appeal by a certain deadline.

For next year, see if the FSA administrator would let you use a Benny Card for paying Dependant Care FSA charges. Some of them only let you use it for Medical FSA, and some allow both. If they let you use Benny Card, then there will be no need to file a claim. Automatic re-imbursals.

I don't know the specific tax rules around dependent care, but for medical expenses, you can only write them off on your taxes if they exceed 7.5% of your income. So, if you're willing to take the risk of forfeiting some of the money, you can use an FSA and get the tax break on the first dollar you spend.

eurekaa said:   What is it with this FSA, Dep. Care use-it-or-lose-it feature? Is it supposed to cover Management costs? Sounds like highway robbery. Can't this be turned into a line item in the tax form?

FSA programs are a PITA to administer. I have a 100 employees and my accountant complains about the overhead and management required to keep the program straight all the time. Plus the FSA administrator charges us about $2000 per year in fees.

I saw this thread and immediately asked my accountant to let me know if I lost money by offering both types of FSA to my employees last year. Since the employees have till March 31st to turn in receipts, I will know the answer by the end of the week.

UDS - That's interesting. Who keeps the unused funds - I guess it's the employer, not the FSA administrator or Uncle Sam?

OP, This may not be of help to you. In general though the deadline can be made flexible. If you had sent any cr*p in by the deadline and they reject it (not legible, invalid use, etc.) they will give you the option of resubmitting it well after the deadline. It's not like they close shop on 3/31. I guess in some ways, "I forgot" won't work, but "got lost in the mail" might.

UtahDealSeeker said:   eurekaa said:   What is it with this FSA, Dep. Care use-it-or-lose-it feature? Is it supposed to cover Management costs? Sounds like highway robbery. Can't this be turned into a line item in the tax form?

FSA programs are a PITA to administer. I have a 100 employees and my accountant complains about the overhead and management required to keep the program straight all the time. Plus the FSA administrator charges us about $2000 per year in fees.

I saw this thread and immediately asked my accountant to let me know if I lost money by offering both types of FSA to my employees last year. Since the employees have till March 31st to turn in receipts, I will know the answer by the end of the week.

Yes, it is the employer who keeps the unused funds.

eurekaa said:   UDS - That's interesting. Who keeps the unused funds - I guess it's the employer, not the FSA administrator or Uncle Sam?

OP, This may not be of help to you. In general though the deadline can be made flexible. If you had sent any cr*p in by the deadline and they reject it (not legible, invalid use, etc.) they will give you the option of resubmitting it well after the deadline. It's not like they close shop on 3/31. I guess in some ways, "I forgot" won't work, but "got lost in the mail" might.

UtahDealSeeker said:   eurekaa said:   What is it with this FSA, Dep. Care use-it-or-lose-it feature? Is it supposed to cover Management costs? Sounds like highway robbery. Can't this be turned into a line item in the tax form?

FSA programs are a PITA to administer. I have a 100 employees and my accountant complains about the overhead and management required to keep the program straight all the time. Plus the FSA administrator charges us about $2000 per year in fees.

I saw this thread and immediately asked my accountant to let me know if I lost money by offering both types of FSA to my employees last year. Since the employees have till March 31st to turn in receipts, I will know the answer by the end of the week.

axast said:   I don't understand - you are complaining about money lost - but on the other hand you were KIND OF paying double the amount for childcare expenses. Double because - deduction from paycheck for FSA and actual money you would pay the daycare. What I fail to understand is - don't you pay the day care on a weekly/monthly basis? Why didn't you file for FSA claim as you kept paying Daycare fees on a weekly/monthly basis. Late or not, why would you wait to get re-imbursed(for lack of term) for the entire year?

Sometimes we have to pay for our own negligence. In any case, I would write a written appeal to your FSA company (whichever one your employer appointed) to seek a one time forgiveness and see if they might take pity on you. Sometimes, they do - if it is a valid reason. Also, there is a deadline to apply for that as well. I am not sure what it is. Call them. I have used that once for a small amount because I had to travel for emergency reasons and my last claim was late by a week. I do recall the CSR telling me that I have to send in a written appeal by a certain deadline.

For next year, see if the FSA administrator would let you use a Benny Card for paying Dependant Care FSA charges. Some of them only let you use it for Medical FSA, and some allow both. If they let you use Benny Card, then there will be no need to file a claim. Automatic re-imbursals.


If you don't need the FSA funds immediately, why file all the time?

I wait until I've incurred $5k in expenses (usually by June), then file. I get a lump sum of contributions-to-date, then a payment every 2 weeks when my paycheck hits.

Btw OP, I feel for you. The thought of losing $5K due to putting off faxing over a form makes me queasy. I've lost a few hundred dollars here or there for similar laziness and felt horrible for weeks.

I would try the 'lost in the mail route' ... call and nonchalantly say "hey uuuuuh, I sent that form in a couple months ago, how long does it take to get my reimbursement? Oh what's that, you didn't get it? Weeeiiirrdduuuh."



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