@JeanGeslin wrote:
I am in a similar situation: we spent more than $16,000 in child care for our 2 children. My wife elected for a $5,000 FSA. We have already requested reimbursement for the full amount and it's reported in Box 10 of my wife's W-2.
When we filed our taxes, we realized that the dependent care credit would be more beneficial for us. So my question is can we include the $5,000 in our taxable income and claim the full dependent care credit?
I checked a few IRS publications, and it sounds that we can decide whether we want to exclude the FSA from our income. For example Publication 503 states that "If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you.". Does that mean that we are not required to exclude them?
Thank you!
Form 2441 does not give you the option. In part 3, you must enter the amount you received as a DCB from box 10 of your W-2. Then your child care cost is subtracted, and the remaining child care cost is eligible for the credit on the front of the page. You received benefits that were "excluded from your income" because they are in box 10 of your W-2 instead of being included in your box 1 taxable wages. There's no procedure to voluntarily add the DCB to your taxable Income and then use the credit.
