The tax benefit for Child and Dependent Care is two different benefits:
1. A Dependent Care FSA that shelters contributions to the FSA, and
2. A Child and Dependent Care Credit that interacts with the FSA
Many taxpayers set aside money with their employer into a Dependent Care FSA. This amount is reported in box 10 on your W-2. This amount is listed on line 12 on form 2441. This amount is removed from Wages in boxes 1, 3, and 5 on your W-2 before it is printed - this is your tax benefit.
The max that you can contribute to your Dependent Care FSA is $5,000.
However, the maximum that you can spend on each child and get a tax benefit is $3,000, $6,000 for two kids and up ($6,000 is the max).
That means that you may have $1,000 in qualifying child care expense that is paid by you directly, not out of your FSA. This $1,000 expense (if you spent that much and have two or more children) is available for the Child and Dependent Care Credit, being multiplied by a percentage based on your income (see line 8 on form 2441).
The credit would appear on line 9 and on line 11, as limited. As noted above, this would appear on Schedule 3, line 2.
So, did you have an amount in box 10 on your W02? Did you have a 2441? Did you have amounts on lines 8, 11, and 12?
Make sense?
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