Dependent Care Expense account reported in Box 10 as Dependent Care Benefits?

[Mky89]

@DawnC 

Why would I have an amount in box 10 if I didnt ask for an fsa? I dont have any dependents. Its just myself. How can I fix that?

[BillM223]

You need to take this up with your payroll department. Once TurboTax sees an amount in box 10, it has to assume that you have a Dependent Care FSA.

You may need a corrected W-2 from your employer.

@Mky89

[Boondon2587]

Ok. So I have been reading through the posts on this topic and decided to look up a few things on Box 10 from the IRS website. The below reference says "Box 10 of your W-2 shows the total amount of dependent care benefits that your employer paid to you or incurred on your behalf. Amounts over $10,500 ($5,250 in the case of a separate return filed by a married individual) are also included in box 1.

The bolded statement is where my confusion comes in.  My employer does NOT pay for my FSA, it comes out of my paycheck. Is the information on the IRS website wrong? Should my W2 be corrected?

https://www.irs.gov/faqs/interest-divid[product key removed]-of-income/employee-reimbursements-form-... 

[Critter-3]

FSA you put into is also reported in box 10 ... the W-2 form is correct.  See page 18 of the instructions:    https://www.sapling.com/12035026/flexible-spending-account-show-up-w2

[TeresaM]

You are right, the FSA funds are coming from your wages but are paid without having federal tax withholding. Your wages in box 1 are subject to federal income tax withholding. The wages in box 10 for dependent care benefits are pulled out pre-tax.  Your W-2 sounds correct as far as you describe it.

If the employer had on-site day care, they might incur child care costs on your behalf and the amount in box 10 would show those costs deducted out of your paycheck, which would still be part of your wages, but not included in your check and broken out so there was not federal tax withheld. 

[hmiltz]

in order to deduct child care both spouses need to have income UNLESS one if a full time student @Gringo2005 

[JohnL49]

Hi Teresa, I want to ask a question from your answer below.  My employer provides on-site day care, and the amount of box 10 of W-2 considered as discount/scholarship.  When I receive the end of year statement from day care, do I need to deduct the amount on box 10?

For example, my day care statement for 2021 is $10,000.  The amount on box 10 (W-2) is $5,000.  Under Child and Dependent Care Credit, I can split $2,500 for each kid.  Is this correct?

"If the employer had on-site day care, they might incur child care costs on your behalf and the amount in box 10 would show those costs deducted out of your paycheck, which would still be part of your wages, but not included in your check and broken out so there was not federal tax withheld."

[DawnC]

It depends.   Enter the amount you actually paid.   If you paid 10K, enter 10K.   If you only paid 5K, then yes, enter $5K or $2500 for each dependent.    TurboTax will add all your eligible expenses and then subtract out amounts in Box 10 to determine the amount of your expenses that qualify for the credit.   

@JohnL49

[JohnL49]

Hi Dawn,

The total out of pocket expenses for 2 kids are $5,000.  The discount/scholarship on box 10 is $5,000.  The total paid amount on daycare statement is $10,000.  To confirm, I can only claim $5,000 since it is actual expenses.  Correct?

I think I understand and did it right.  Just want to confirm, thanks a lot!

[DawnC]

That looks right John!   You are getting a tax break on the full $10K.    You have $5k in wages that were not taxed.   And the remaining $5k that you paid out of pocket is eligible for the credit.   Your credit for eligible expenses is 50% (that is based on your AGI), so your Child and Dependent Credit is $2500.    You will see that on Schedule 3.   

@JohnL49