DCFSA and Child and Dependent care Credit with no box 10

[peter85]

I contributed $5k to my DCFSA (I have one child).  My employer left box 10 of the w2 blank and is not responding to questions so far.  Is there a way to manually input my FSA contribution into turbotax?  Without it, the software is giving me the $600 ($3000*.2) Child and Dependent Care Credit, which I am pretty sure I am not eligible for, right?  Should I just type it into box 10 when I input my w2, or will that create unforeseen problems since it won't match the one being sent to the IRS?

The $5k was correctly excluded from boxes 1,3, and 5, and as far as I know it is a normal, plain vanilla DCFSA situation, so it should have been in box 10 right?

[DianeW777]

It depends.  If the amount was through a flexible spending account (FSA) provided by your employer it should be in Box 10 of your W-2 as you indicate.  If the employer did not have the appropriate plan, then the $5,000 they provided could be taxable compensation.  If this is the case it would be included in box 1,3, and 5.  Double check your pay statements to see if you actually did receive tax free treatment of this benefit or if it was part of your taxable compensation.  

If it is part of your taxable compensation, then you should proceed with the return taking the Child and Dependent Care credit.

If it was provided to you tax free and not included in the box 1,3 and 5, then you should create a substitute W-2 and add this amount to Box 10.  This will require you to mail and file by paper.

• How do I file a substitute W-2 using Form 4852?

[peter85]

Hi Diane,

Thanks for your response.  It was provided to me tax free and not included in boxes 1,3,5, so that part is correct.  What would happen if I simply added the correct amount to box 10 when I manually enter the w2 into turbotax?   Can I do that instead of filing a substitute w2?

[BillM223]

Changing the W-2 as you describe means that your copy of the W-2 will not match the copy that was sent to the IRS. This is likely to generate a letter from the IRS assessing you extra tax, and asking you to explain what you did.

That's why I would encourage you to read this IRS page all the way to the bottom. because it describes the steps you should take in your situation.

If you have a IRS Taxpayer Assistance Center near you, that would be a great help. But, the final result is that you will likely complete a 4852 and add it to your return, as Diane said.

What you must do is document everything, especially how you know that the FSA contributions were removed from your Wages, which is clear evidence that your employer just made a mistake in box 10 of your W-2.

[peter85]

Hi Bill, 

Thanks for your reply.  Form 4852 only seems to care about incorrect items in boxes 1-7 of the W2.  So in my case, all of those items are already correct on the w2 and there's no place to correct box 10.  

What would happen if I simply didn't declare any childcare expenses to turbotax?  The amount of tax owed to the IRS would still be correct, and no form 2441 would be generated at all.  

[AmyC]

If you receive no child care tax credit, that is a good solution. You may not have any issues with this method.

Side note -I suggest you keep a record of everything you did to try and create an accurate return in case the IRS asks any questions in a few years. As long as you can show the tax liability is correct, they will be satisfied - eventually.