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Hi All,
I have my wife and a 3 year old kid as my dependents.
Around September 2005, my wife started looking for a job and got a good offer. Anticipating that she will start working soon, I enrolled in the "Dependent Care FSA (Flexible Spending Account)" at my work to cover from my kid's pre-school expenses. It was a middle of the year enrollment starting from October 1 until December 31. I contributed about $2000 into the plan.
Unfortunately my wife did not get the job and continued looking for employment. The year ended and she never got any job. I have since got reimbursed the $2000 that I contributed in the plan.
However since my wife did not have any earned income during the year, those claims are clearly ineligible. How do I handle this during tax filing? Should I report the $2000 as ordinary income, or is there more to it like penalties etc.?
Thanks
I have my wife and a 3 year old kid as my dependents.
Around September 2005, my wife started looking for a job and got a good offer. Anticipating that she will start working soon, I enrolled in the "Dependent Care FSA (Flexible Spending Account)" at my work to cover from my kid's pre-school expenses. It was a middle of the year enrollment starting from October 1 until December 31. I contributed about $2000 into the plan.
Unfortunately my wife did not get the job and continued looking for employment. The year ended and she never got any job. I have since got reimbursed the $2000 that I contributed in the plan.
However since my wife did not have any earned income during the year, those claims are clearly ineligible. How do I handle this during tax filing? Should I report the $2000 as ordinary income, or is there more to it like penalties etc.?
Thanks
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