Question of the Week

Posted by BAS - 08 August, 2019

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Q.- I have to pay a registration fee for my child’s day care which will start in September. It is a big fee and I want to be reimbursed from my Dependent Day Care FSA now. Will this be a problem?

A.- The registration fee will not be an eligible for reimbursement until after the care is provided. Treasury Regulation section 1.21(d) states-

(11) Indirect expenses. Expenses that relate to, but are not directly for, the care of a qualifying individual, such as application fees, agency fees and deposits, may be for the care of a qualifying individual and may be employment-related expenses if the taxpayer is required to pay the expenses to obtain the related care. However, forfeited deposits and other payments are not for the care of a qualifying individual if care is not provided.

Since forfeited deposits are not for the care of a child and will not be eligible dependent care expenses, such deposits may not be reimbursed until the care is actually provided.


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