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Deductions & credits

An FSA is funded with your own income deduction. It is not funded by your employer. Enter the Box 10 amount on your W-2. You have the option of having your child care paid for by an FSA or out of your own pocket. Once the FSA is chosen, you can't get a credit since the FSA paid the fee, not you.

 

Flexible Spending Arrangement (FSA) is a special account you set up with pre-tax contributions to use for medical or dependent care expenses.  These contributions aren't included in your taxable wages reported on Form W-2. You can pay from or be reimbursed from your FSA account as you incur expenses.

Amounts contributed to an FSA aren't subject to federal income tax, Social Security tax, or Medicare tax, allowing your medical or dependent care expenses to be paid with pre-tax rather than after-tax income.