How do I handle a Flexible Spending Account being used for child care?

Clients may have Flexible Spending Accounts through their employers and designate the funds in those accounts to be spent for child care or day care.

If the amount in the fund covers the full child care cost, then do the following:

1. Show just one party on the expenses page (at the top).
2. Find the line on the expense page where child care is entered.
3. Enter the amount allocated to the flexible spending account as a Child Care cost.
4. Scroll down to the line where you are entering child care and then click the “more info” button.
5. Set the Tax Category to “Pre-tax.”

But what if the amount in the fund does not cover the full child care cost?

Here are the steps to take:

1. Enter total child care expenses on the line for child care and set the tax category to be “Pre-tax,” as outlined above.
2. On Reports > View/Edit Taxes, override the Payroll Deductions line in the Adjustments section so it includes only the FSA portion.