Box 10 is for the dependent care FSA contributions for the year. Unless you have childcare expenses during the year that qualify to offset the amount, then it becomes taxable income.
If you used the money to pay for Dependent Care Benefits, then during the W-2 interview process, on the pages that follow entering the actual boxes, you need to answer "Yes" to used money to pay for dependent care expenses.
Then, you will need to go through the Dependent Care section under Deductions and Credits. When it asks again if you used the money for dependent care for the year, you answer "Yes".
I did all of that. It didn't work. The amount reported in box 10 of W2 is still being added back to taxable income.
I have the same problem. I added all dependent care provider expenses correctly...total nearly $25K this year. When I add W2 Box 10 Dependent Care Benefits value of $5,000 (aka, the maximum allowed for Dependent Care Flexible Savings Account), this increases my tax bill by $1,000. This should be a nontaxable benefit--why is my tax bill increasing when this value is added?
Same problem here as well... I have had a FSA for dependent care for over 4 years. I have never had this problem come up until this year. The whole reason why I have a FSA is so that these funds are not taxed. As soon as I put in the amount from box 10 my tax bill shoots way up. Even after I put the information in about my dependent care expenses nothing really changes. I get a very small tax credit, but I am still owing in a large amount which has never happened. I feel something is wrong. I am getting hit with an extra $700 in taxes here... what is the deal with this??
Same thing is happening to me. Dependent care benefits being added back to income
Same here!!! is there an income limitation? I just got divorced so now I am triggering the incoming limitations with only 1 adult.
Same issue. Problem appears to be occurring because we don't qualify for the Child and Dependent Care Tax Credit, but we aren't trying to take that credit. We are only trying to enter provider information to prove we used the W2 Box 10 dependent care benefit on qualified dependent care expenses. Wonder how many people are losing thousands to Uncle Sam due to this error on Turbotax's par. (Yes, my wife and I both work, so we should not be taxed on the dependent care benefit spend on qualified dependent care expenses).
I thought the same was happening to me, but I think I figured it out. Before entering the box 10 information the full $6000 is considered for the dependent care credit. Once the $5000 (or whatever amount you have) from box 10 is entered into Turbo Tax, this takes away from the amount that is eligible for the dependent care credit (because it was taken as a pretax credit during the year) and lessens the overall tax return. Hope this helps.
This is completely unclear and something TurboTax need to address and explain immediately. I'm not sure whether to amend my return or not.
TurboxTax has the full amount of my dependent care flexible spending on Form 2441 as taxable! How can this be!!!!
jenlarcar that makes no sense. Why would TurboTax assume you have $6000 worth of child care expenses before entering it??
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.
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.
There is no income limitation., on claiming Dependent Care benefits (DCB).
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?
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-reported-in-box-10-as-dependent-care-benefits/00/40332 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.
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??
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.