W2 line 10 dependent care benefits, why taxable?

[Dave5550]

TurboxTax has the full amount of my dependent care flexible spending on Form 2441 as taxable!  How can this be!!!!

[Dave5550]

jenlarcar that makes no sense.  Why would TurboTax assume you have $6000 worth of child care expenses before entering it??

[jenlarcar]

Not assumed. Considered.

[theresa-thompson]

https://www.irs.gov/instructions/i2441

Not sure if this will apply to all of you, but for any of you with dependent care benefits in box 10..in order to exclude them from taxable income your spouse must have earned income as well or meet the exceptions as being a full time student or incapable of taking care of his/her self. So if anyone has a spouse that is a stay at home parent...they will not get to exclude the benefits from income.

[Hal_Al]

Go thru the Turbotax  (TT) dependent care  interview, again, and check all your answers. if your qualify, TT will generate form 2441, Part III,  to claim the dependent care benefit exclusion.

The most common (but not the only) disqualifier is that your spouse did not have any earned income.

[Hal_Al]

There is no income limitation., on claiming Dependent Care benefits (DCB).

[schoeff7]

Did anyone get resolution to this?  The 5,000 that went to the FSA clearly got included as income in my AGI, so I essentially retroactively was charged taxes on it.  My spouse and I both work and it's clearly entered how much we spent on child care (14,000).  It doesn't make any sense.  Has anyone contacted turbo tax?

[GWPayrollAccountant]

OK, here's the scoop and I think this link explains it pretty clearly .... https://ttlc.intuit.com/community/tax-credits-deductions/discussion/dependent-care-expense-account-r... In a nutshell, the FSA Dependent Care Deduction you have withheld from your paycheck all year is an "advance" on your year end tax credit. If it turns out that you are not eligible for the tax credit, 100% of what was withheld becomes taxable. If you are eligible for the credit, you already received an advance on the credit through the FSA payroll withholding (it was not taxed), so that amount is deducted from your total possible credit at year end. You don't get the credit twice! Turbo tax is not "taxing" it by adding it back, it is simply reducing your total eligible credit by the amount you already received throughout the year in your paycheck.

[zcs]

I went through the interview and Turbo tax generated form 2441 Part III correctly. You mentioned below that the most common disqualifier is that your spouse did not have earned income. I am the spouse with earned income and my husband, the taxpayer, was a full time student. According to form 2441 instructions it should populate $250 per month on line 18 for taxpayer's earned income as he was a full time student but it's not! And it's therefore calculating my dependent care benefits as taxable benefits and not excludable benefits. 

can someone help me out??

[JohnW222]

Your best bet is to delete your Child and Dependent Care data on Form 2441 and re-input, being particularly careful about your answers.

Please see the TurboTax Help article “How do I delete Form 2441 in TurboTax Online?” for guidance.

[zcs]

Thanks. How can I re-input the data? And why would it be any different when re-doing it? 

Sorry, I'm just not sure I understand... 

[ctyates_824]

Can I just exclude and leave my box-10 blank? 🙂 and not report ANY child care credit? 

[sanjibdas96]

Yes. I have the same problem. the dependent care benefit got added to income.  I went ahead and file my return. how do I amend it now ?

[sveta1910]

Hi 

I have the same problem, did you manage to resolve it?

thanks

[RobertB4444]

@sveta1910  There are multiple possible reasons for a taxable amount to be generated by box 10 on your W2 and your form 2441.  Most have been listed in this old thread.

First, both you and your spouse have to have earned income or be full time students.   Second, you can't be income limited out of being able to claim the child and dependent tax credit.  Third, you have to have approved care expenses greater than the amount that you were given in box 10 of your W2.  

If you meet all of these qualifications and it is still showing up as taxable then you need to go back through and re-check your entries.  Make sure that all of the entries related to the child and dependent care credit are correct and that all of the W2s in your return are attributed to the correct individuals.