My company increased the amount we can contribute to the Dependent Care FSA to $10,500 mid year. I changed my election to $10,500 and at the end of the year in December 2021, the company failed the Dependent Care 55% Average Benefit Nondiscrimination Test.
To fix this, my company added $3,562.04 to my taxable income. The taxes for $3,562.04 were taken out my last paycheck of 2021 (great Christmas gift from my company). I can see this amount has been added to my Box 1, 3, 5 in my W2. However, in box 10 (Dependent Care Benefits) of my 2021 W2, the company still listed $10,499.97. I believe this is incorrect because box 10 is used by TurboTax to fill out Form 2441 line 12.
What I have done is, manually overridden the calculation and put 10,499.97-3,562.04= $6937.93.
Is there a better way to do this in TurboTax? Did my company put the wrong amount in my W2 Box 10?
I'm following the instruction found on Form 2441 line 12:
Enter the total amount of dependent care benefits you received in 2021. Amounts you received as an employee should be shown in box 10 of your Form(s) W-2. Don’t include amounts reported as wages in box 1 of Form(s) W-2.
