August 27, 2020 10:25 pm

IRS Can’t Change Reimbursement Deadline for Dependent Care FSAs

Dependent care flexible spending accounts (FSAs) set the deadline for submitting requests for reimbursement. For example, a company’s plan may limit reimbursements to requests submitted within 30 days of the close of the year. The IRS has made it clear (INFO 2020-0005) that it lacks the authority to change the plan’s deadline for submissions. Employees with outstanding dependent care expenses should be mindful of the submission deadline.

Note: Medical FSAs can permit carryovers up to a set limit (e.g., $550 for unused amounts in 2020) if they do not provide for a grace period.

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Tax Glossary

Private letter ruling

A written determination issued to a taxpayer by the IRS that interprets and applies the tax laws to the taxpayer’s specific set of facts. A letter ruling advises the taxpayer regarding the tax treatment that can be expected from the IRS in the circumstances specified by the ruling. It may not be used or cited as precedent by another taxpayer.

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