OMG, just realized I forgot to claim our FSA dependent care funds for 2016

[Anonymous]

makes me feel better for forfeiting $400 in medical. I'm sorry, OP. That sucks.

[Anonymous]

So what happens to unclaimed money?

[Anonymous]

Sorry that happened OP. Sometimes I used to wonder if these plans were really worth the stress/risk, but ultimately they generally are. The key is just to claim it every month starting in January until you've used it up. I have a high income but I still cared about getting that money back as quickly as possible.

I make a (paper) checklist of all bills and financial tasks that I use throughout the year to make sure nothing falls through the cracks. That includes the one time things like an extra amount to our HSA to make sure we've hit the max, or my IRA contribution, or DHs SEP. I even put our regular contributions on it so I don't donate twice in a year (sometimes I get multiple mailings and forget who I've already sent a check to). I find that works better for me than calendar reminders.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OMG, I feel physically ill. My husband is going to have a coronary...

Well he forgot about it too, right?

Sorry OP, this sucks.

We are another family who has tapped it all about by February. So no way we forget about it.

Trust me, it's not like we didn't need the money--we just can't claim it till the end of the year. Our daycare doesn't provide receipts until mid-January, so we always get it in one lump sum.

This is not cool. Your daycare should be able to provide you that information at anytime. Especially in the DC area - even in "cheap" places, that money is used up in 3 months or less.

I no longer do the dependent care, but I used to claim mine quarterly due to how my employer lets you claim. I left $1000 in a health care account when I was young and single and needed that $1000, so I no longer wait until the end of the year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OMG, I feel physically ill. My husband is going to have a coronary...

I'm sorry you are losing this money. Looking ahead..

1. For 2016, you can't do anything - Just don't tell your husband...If he typically does not pay attention to this, why bother. Compensate by spending less on your personal stuff (if you DO spend a lot on your own stuff).
2. For 2017, if you did contribute to FSA, add a monthly reminder on your calendar - pick a Friday, and have it set to repeat each month - so you claim the money each month.

I am seriously considering this. I handle the finances, so he'll never notice if I don't tell him. Is that horrible? I can't freaking believe I made such a huge, expensive mistake.

[Anonymous]

You really need to ask your daycare provider to provide you receipts before next January. That's unacceptable.

[Anonymous]

Shouldn't this also affect your taxes? You can utilize either the Dependent Care FSA or take the Dependent Care Tax Credit, but you can not take a tax credit for expenses that have been reimbursed by the FSA, since yours weren't reimbursed by the FSA, can you take the tax credit?

[Anonymous]

Anonymous wrote:Shouldn't this also affect your taxes? You can utilize either the Dependent Care FSA or take the Dependent Care Tax Credit, but you can not take a tax credit for expenses that have been reimbursed by the FSA, since yours weren't reimbursed by the FSA, can you take the tax credit?

No, it wont. The $5000 she deposited into the FSA is allowed as a deduction in taxes. Ideally, she would have used those funds for her expenses AND gotten the tax write-off on that amount as well. At 25% tax rate that would be $1,250 in benefits. Now she has a $3,250 loss. If the tax rate is higher, the loss is lower.

[Anonymous]

Anonymous wrote:Shouldn't this also affect your taxes? You can utilize either the Dependent Care FSA or take the Dependent Care Tax Credit, but you can not take a tax credit for expenses that have been reimbursed by the FSA, since yours weren't reimbursed by the FSA, can you take the tax credit?

Thanks, this is a good point. I don't know, but I'll look into it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OMG, I feel physically ill. My husband is going to have a coronary...

I'm sorry you are losing this money. Looking ahead..

1. For 2016, you can't do anything - Just don't tell your husband...If he typically does not pay attention to this, why bother. Compensate by spending less on your personal stuff (if you DO spend a lot on your own stuff).
2. For 2017, if you did contribute to FSA, add a monthly reminder on your calendar - pick a Friday, and have it set to repeat each month - so you claim the money each month.

I am seriously considering this. I handle the finances, so he'll never notice if I don't tell him. Is that horrible? I can't freaking believe I made such a huge, expensive mistake.

I share information with ANYONE on an as-needed basis, and I determine that need. Other than making you feel bad about not telling him, what are the consequences? Think through this and decide. Telling him will not get you the money back.

[Anonymous]

Urp. This is one of my great fears... well, involving the misplacement of sums of money ... I am so sorry!

It's pretty ridiculous that a system was created where contributors can simply be "out" thousands of dollars in 24 hrs. Or even hundreds, as they try go guess unknown medical expenses in the hopes of reclaiming a quarter of the expense. They already get to sit on the money all year, earning interest. Better to charge everyone a $10 administration fee and be done.

[Anonymous]

Anonymous wrote:So what happens to unclaimed money?

The companies that run this scam get to keep it. That's how they make money. The ideal way to do this would be to allow everyone with a child upto 14 years (or 18 or whatever) a deduction of $2500 for childcare. No overheard, easy to prove, etc. However, that's not how it's done. Companies and their friends in congress/senate implement this scam/scheme where you deposit money with them and request it back. If you don't ask for it back in time, you lose it!

[Anonymous]

Anonymous wrote:

Anonymous wrote:Shouldn't this also affect your taxes? You can utilize either the Dependent Care FSA or take the Dependent Care Tax Credit, but you can not take a tax credit for expenses that have been reimbursed by the FSA, since yours weren't reimbursed by the FSA, can you take the tax credit?

No, it wont. The $5000 she deposited into the FSA is allowed as a deduction in taxes. Ideally, she would have used those funds for her expenses AND gotten the tax write-off on that amount as well. At 25% tax rate that would be $1,250 in benefits. Now she has a $3,250 loss. If the tax rate is higher, the loss is lower.

I'm not following your logic. Typically the $5000 comes out pre-tax from salary, not claimed as a deduction. The dependent care tax credit is separate from the FSA (but cannot be double-dipped) up to $3000 for one child, $6000 for two or more children.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Shouldn't this also affect your taxes? You can utilize either the Dependent Care FSA or take the Dependent Care Tax Credit, but you can not take a tax credit for expenses that have been reimbursed by the FSA, since yours weren't reimbursed by the FSA, can you take the tax credit?

No, it wont. The $5000 she deposited into the FSA is allowed as a deduction in taxes. Ideally, she would have used those funds for her expenses AND gotten the tax write-off on that amount as well. At 25% tax rate that would be $1,250 in benefits. Now she has a $3,250 loss. If the tax rate is higher, the loss is lower.

I'm not following your logic. Typically the $5000 comes out pre-tax from salary, not claimed as a deduction. The dependent care tax credit is separate from the FSA (but cannot be double-dipped) up to $3000 for one child, $6000 for two or more children.

Two different things.

Dependent care tax credit is based on income - If you spend money on child care, you get a portion of it back as tax credit depending on your income.

Dependent care FSA is a savings account where you can contribute upto $5000. On your taxes, it is called out as a line item as a deduction (not a tax credit). Since this deduction is uniform for everyone, it is factored as a pre-tax item in your taxes and the company does not hold back any taxes to that extent. In fact, all pre-tax items are deductions on your tax return (e.g. 401K contribution, Medical HSA, Healthcare FSA, etc)

[Anonymous]

Anonymous wrote:

Anonymous wrote:So what happens to unclaimed money?

The companies that run this scam get to keep it. That's how they make money. The ideal way to do this would be to allow everyone with a child upto 14 years (or 18 or whatever) a deduction of $2500 for childcare. No overheard, easy to prove, etc. However, that's not how it's done. Companies and their friends in congress/senate implement this scam/scheme where you deposit money with them and request it back. If you don't ask for it back in time, you lose it!

Agree with this - but on the medical side, there's a way for the company to be out money, since you can use every penny of that amount on day one of the year. If you quit two months in, there's nothing they can do to request the money back. In theory, it evens out, but the dependent care one doesn't have the same loophole.