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Childcare funds do not roll over. Therefore, if you have $400 in the child care account that is not used for costs incurred by December 31st, you will forfeit a portion of the funds. Any remaining balance not used is divided amongst all of the child care cafeteria plan participants. We then pay that money back to the participants as taxable income in the following year. Therefore, if you have remaining funds in the childcare account, you will likely only get some of the money back, as some of the money will also go to the other participants in the program.
Are Foster
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Care dependants eligible for this benefit?
A foster child is eligible as long as the child is considered a dependent of the employee for federal income tax purposes. This means the employee must provide more than half of the financial support (Sec. 152(c)(1)(D)), the foster child must live with the employee for more than one-half of the year (Sec. 152(c)(1)(B)), the foster child must be less than 19 or a student less than 24 on December 31 (Sec. 152(c)(1)(C)), and the foster child was placed with the employee by an authorized placement agency or by judgment, decree, or other order a court (Sec. 152(f)(1)(C)). And the placement is formal (see the preceding sentence). (This is an IRS regulation).
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