@brian193 wrote:
if they were 2 separate companies, i wouldnt have the issue.
I think that's basically the issue.
Suppose you worked 6 months for Bank A, and received $8000 in day care assistance. Box 10 would show $8000 and box 1 would be increased by $3000.
Then you worked 6 months for Bank B, and they also provided generous day care assistance in the amount of $7000. Box 10 would show $7000 and box 1 would be stepped up by $2000.
In this case, because you received $10,000 in dependent care benefits and the maximum exclusion is $5000, Turbotax should add another $5000 to your taxable income, because--since you used up the $5000 tax free amount at Bank A--the entire benefit at Bank B should have been taxable.
If I understand your problem, Merrill gave you (let's say) $8000 in dependent care assistance, reported $8000 in box 10 and added $3000 to box 1. Then you got a separate W-2 from BOA. BOA provided $7000 of dependent care assistance and reported it in box 10, but also added the entire $7000 to box 1, because they coordinated with Merrill and knew you exceeded your limit.
Your tax return would be correct if BOA had not added the DCB to box 1, because any tax program would make that amount taxable automatically. Your tax return would also be correct if BOA had simply added the dependent care amount to box 1 and left box 10 blank. And really, BOA did not provide you with any tax-free dependent care benefit because you used up the tax-free amount at Merrill.
Assuming your assessment of the situation is correct, you can fix this by
a. leaving your BOA box 10 blank in Turbotax
b. reducing your BOA box 1 amount by $5000
c. filing a "substitute W-2 form" to report your BOA W-2 using the values that should be there rather than what is there (a blank box 10).
Any of these methods is likely to get you a letter from the IRS assessing income tax on the missing $5000 unless you can explain yourself to their satisfaction. You also aren't supposed to use the substitute W-2 form until you have requested a corrected W-2 and waited a reasonable amount of time, or been refused.
