FSA dependent care question

[waverly]

We are hiring a babysitter for a while since no camps are open.

I don’t know how much we will end up paying her whether it will be over or under the taxable amount. I don’t know if she will eventually go back to her old job which opens in a later phase.

In order to use money from our FSA, do we need to set up to take taxes out right away at the beginning? Any resources for setting up nanny tax?

Is there anything we can do to change the FSA contribution? DH asked his job and they said no it’s based on the annual selection. But hello, pandemic, you would think they could make exceptions. DH says no it’s based on the IRS. Do any of the new pandemic laws reference FSA’s? Also I read the previous thread and other people are able to cancel them due to no care being a qualifying event. Even though we will have some summer care we didn’t have care from March- June, and who know what care is available in the fall.

[flygirl]

My employer allowed me to stop my FSA deductions. I thought someone posted something on the IRS guidance and change due to the pandemic...maybe on the moms board...I’ll try to find it.

www.marketwatch.com/story/irs-loosens-rules-on-flexible-spending-accounts-as-coronavirus-pandemic-takes-financial-toll-2020-05-14

www.irs.gov/pub/irs-drop/n-20-29.pdf?mod=article_inline

[waverly]

Thanks I forwarded them to DH since they are his accounts with his employer.

[kershnic]

I don't know what they based it on, but our employer allowed us to stop contributions.

[hocus2]

I stopped contributions and the federal laws allow employers more flexiabilty.

We had a sitter on the books. It was fairly easy but took about 2 weeks to set up. You can retro-actively pay taxes if you want to but it easier to just start from the get go. There are a few websites that do the payroll for you if you want it.

[sent]

You may want to check that FSA funds can be used to pay a babysitter or nanny. I was under the impression the funds had to be used to pay some type of structured corporate entity because my accountant is always asking me for the tax ID number of the daycares when they do our return to account for the FSA deductions from my husband's paycheck. Last year I even had to separate out the charges by kid for them.

[Stan]

May 27, 2020 20:24:10 GMT -5 sent said:

You may want to check that FSA funds can be used to pay a babysitter or nanny. I was under the impression the funds had to be used to pay some type of structured corporate entity because my accountant is always asking me for the tax ID number of the daycares when they do our return to account for the FSA deductions from my husband's paycheck. Last year I even had to separate out the charges by kid for them.

You can also provide the SSN of the caregiver. It's the tax ID, so for an individual providing care, it's their SSN or other TIN. The real issue is that you have to use the child care to be working or looking for work. 


www.irs.gov/pub/irs-pdf/fw10.pdf

www.irs.gov/pub/irs-pdf/p503.pdf

[mplsmom23]

Ok can someone explain this to me like I’m 5? Since my summer camps have been canceled, my mom may watch my kids for me a bit while I work. If I submit the FSA forms with her SSN and she claims the pay as income on her taxes, what else do I need to do? Go to a payroll website and set up payments? Any recs? I’m been using the FSA for years but only with daycare centers. Thanks!

ETA: it will be about $1100 total that my mom gets. That is the overage we will have in the account that I want to use up.

[ellipses84]

mplsmom23 You may want to check with your FSA company. I know mine had a form that we had to fill out, then the care provider had to fill in a portion with the TIN or SSN and sign it, and we’d submit that along with a statement showing when and how much we paid. That was for us to get the reimbursement. I use Turbotax and it would ask for the care provider’s info and total yearly amount there. We used a home daycare, but I believe if it’s an individual you just need to make sure they are claiming it on their taxes, as you are, since they could get in trouble with the IRS if there’s a discrepancy. If care is occurring in your home, you should look into nanny laws in your state, though. Most people I know in that situation go through a payroll company.