How does one reconcile and account for FSA liabilities at the end of a fiscal year? I currently have a liability account where payroll deductions go in and claims are taken out. When we established the account I created a receivable account for the IRS required upfront company funding. What triggers the relief of that receivable? Employees have 3 grace months in the following calendar year to file claims and that is beyond the year-end close. How do I show the liability account at year-end if I don't know if anybody is under spent? What happens to the unspent money in terms of a journal entry? Thank you for your input.