Solved
If employer extended use of dependant care benefits to end of 2021 are unspent DCB in 2020 taxable?
Client has DCB from employer and did the mid year adjustment with the employer which allowed extending the time to use the DCB through the end of 2021. Since they only paid a little bit of after school care the unspent portion is taxed as wages on line 1 (normal state of affairs). However my reading of the IRS guidance (Notice 2020-29) and what the client says was told them by the employer is that it should NOT be taxable due to Covid-19 relief packages.
I marked the return to use ARPA provisions ( General-> Misc Info-> Miscellaneous) and it is taking it as taxable.
Questions: Is this really NOT taxable wages in 2020 due to legislation? and if so any suggestions as to how to make the program do what I want it to. Hoping someone else has had to grapple with this.
I marked the return to use ARPA provisions ( General-> Misc Info-> Miscellaneous) and it is taking it as taxable.
Questions: Is this really NOT taxable wages in 2020 due to legislation? and if so any suggestions as to how to make the program do what I want it to. Hoping someone else has had to grapple with this.
