There is a question, "did you forfeit or carry over any of the funds." That's where you will enter the amount of the carryover so it is not taxed. Otherwise, the program and the tax form thinks the entire amount in box 10 was distributed. However, I don't know exactly where this question is located. If it is not in the dependent care benefit interview, it may be in the W-2 interview and comes up when you enter a w-2 with dependent care benefits in box 10. Try reviewing your W-2 again.