Outstanding 2016 flexible spending account claims must be substantiated by June 30 to avoid inclusion as 2017 taxable income

Human Resources is reminding employees who used flexible spending accounts in 2016 that any requested documentation for outstanding claims must be submitted to PayFlex by June 30. If claims are not substantiated by that time, the dollar amount of those claims will be reflected on upcoming pay statements as imputed income and will be reported on employees’ 2017 W-2s.

Employees would have received two quarterly notices from PayFlex detailing the dates and amounts of the payment(s) and information on where the payment was made. These prior notices requested substantiation or proof of eligible expense, which is typically fulfilled with an Explanation of Benefits and/or an itemized receipt. The final notice would have informed the employee that his or her PayFlex card was suspended and would not be reactivated for his or her FSA until the claims were substantiated.

In keeping with instructions from the IRS, the amount for any outstanding claim(s) will be reported on the employee’s next W-2 as taxable income. Purdue will issue 2017 W-2 forms before Jan. 31, 2018. Again, if PayFlex does not receive an Explanation of Benefits or itemized receipt for the claim(s) in question, employees will see the amount reflected on upcoming pay statements as imputed income. Larger amounts will be spread incrementally over their remaining pays of the year.

Questions about FSAs can be directed to Human Resources by phone at 49-42222 or via email at hr@purdue.edu or secure email at HRHelp.