You are right, the FSA funds are coming from your wages but are paid without having federal tax withholding. Your wages in box 1 are subject to federal income tax withholding. The wages in box 10 for dependent care benefits are pulled out pre-tax. Your W-2 sounds correct as far as you describe it.
If the employer had on-site day care, they might incur child care costs on your behalf and the amount in box 10 would show those costs deducted out of your paycheck, which would still be part of your wages, but not included in your check and broken out so there was not federal tax withheld.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
