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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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What can a divorced parent do in employee do with the

Customer Question

What can a divorced parent do in employee do with the following scenario?
In the state of Colorado, an employee became divorced on November 30, 2015. From September 15 - December 15, 2015 employee contributed to Dependent FSA. (with some employer matching so the FSA accumulated an $1800 balance.) with the intent of paying half of his child's pre-school tuition. This parent is the non-custodial parent.
The custodial parent paid the school bill directly and the non-custodial parent reimbursed the custodial parent for his part but did so with after tax funds and did not use the funds in the dependent FSA.
1. Can the non-custodial parent submit copies of the paid bills from pre-school tuition to get reimbursed from the funds in the FSA?
2. Or does the non-custodial parent have to add the total amount contributed from his paycheck into the dependent FSA back into his income and pay taxes on it?
Submitted: 9 months ago.
Category: Tax
Customer: replied 9 months ago.
Correct the first sentence to read, "What can a divorced parent do in the following scenario?"
Expert:  Lev replied 9 months ago.

I know you will not like the answer...

Sorry to be a messenger.

The treatment for the dependent care flexible spending account depends on whether you’re a custodial parent or a non-custodial parent.
If you are the custodial parent – the child is a qualifying individual even you release the claim to the non-custodial parent. You can be reimbursed under a dependent care FSA.
If you are not the custodial parent – reimbursed under a dependent care FSA is not allowed even if you claim your child as a dependent on the tax return.

Prior reimbursements will be treated as your taxable income.

You may request to stop reimbursements based on your change in legal marital status.

Unfortunately - the FSA accumulated balance will be forfeited.

There is nothing we may legally do... At least that amount was not included into taxable wages - so we may not talk about possible deductions.

Sorry again.

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