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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 585
Experience:  10 years experience
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I have a question about flexible spending account limits.

Customer Question

I have a question about flexible spending account limits. I've changed employers and I'm wondering how this impacts my elections. I elected and spent the maximum HCFSA amount of 2550 already, but it's unclear to me if this means I can not elect to contribute to a HCFSA with my new employer. The bottom of page 5 and top of page 6 here: https://www.irs.gov/pub/irs-drop/n-12-40.pdf suggests to me that I can elect the maximum amount under each employer . . . is that right? Does this apply to DCFSA accounts as well?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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IRS Bulletin 2012-40 IS the the most recent guidance IRS produced.

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I can tell you from experience that I have had one client (that I know from conversation that has done this) and the return was processed and the resulting refund provided. - I have seen others but can't tell you that I know results.

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I would tell you from my 30 years experience that this was (1) not the legislative intent, (legislative intent of the law was to set a per taxpayer maximum, just as all other per taxpayer limits are set - e.g., the 18000 salary deferral for 401(k) plans), and (2) I would not be surprised to see a change.

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(2) possibly more important in the long term, is the fact that the law itself (this is ust a revenue bulletin - IRS administers the law, they don't create it) does NOT make this statement.

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(3) As of yet we have not seen any audits disallowing this (but we are just now coming up to the point where those 2013 returns only have this year to be audited (three year statute of limitations on audit) - THAT's when there really will have been some procedural precedent.

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SO, yes, given the above, as of today, you can do this ... and although there are differences fo dependent care as it relates to negative balances, there has been no go=uidance so far that tis does NOT apply to DCFSA as well.