Form 2441 Line 12 Incorrect

[chrisallennc]

On form 2441 line 12 is showing "5,000" whereas on my W-2 in box 10 it's significantly more than that since my employer provides a child care benefit which is more than $5,000. Why is TurboTax not transcribing the number from my W-2 correctly? The same thing happened last year (2022 taxes), we got a letter from the IRS, we had to resubmit an amendment and pay more taxes.

[MayaD]

You don't include the amount reported in box 10 on your W-2 that was reported as wages in box 1.

Per IRS: 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 $5,000 ($2,500 in the case of a separate return filed by a married individual) are also included in box 1.

Instructions for Form 2441 line 12: Enter the total amount of dependent care benefits you received in 2023. Amounts you received as an employee should be shown in box 10 of your Form(s) W-2. Don’t include amounts reported as wages in box 1 of Form(s) W-2. 

For more information, check: 2023 Form 2441

irs.gov

[chrisallennc]

Great, thank you. So for example, if my W-2 shows $6,000 in box 10 my employer should have included the $1,000 (the amount that exceeds $5,000) in box 1 and I should put $5,000 on line 12 of form 2441?

[RobertB4444]

That is correct.

@chrisallennc 

[Opus 17]

Only the first $5000 is excludable from income tax.  The IRS says that the entire DCB should be reported in box 10, but the excess over $5000 should also be reported in box 1 as taxable wages.  The IRS also says that line 12 on form 2441 should not include any amount that was more than your excludable benefit.  So in this case, Turbotax showing $5000 on form 2441 is correct.

You may need to check with your employer if you can't tell whether the excess DCB was included in your box 1 wages. If not, you can create a substitute W-2 to add it, but I would ask the employer for a corrected W-2 first.  But if the excess is already included in your W-2 box 1, then Turbotax seems to be behaving correctly in this situation and you should not have to make any manual adjustments or corrections.  

Also, if the excess benefit was already included in your box 1 wages, then I don't see why you would have owed more tax last year.   You or the IRS may have misunderstood the situation, I wonder if you overpaid.  If you care to provide more information about 2022, we might be able to help you determine if your amended return was wrong and if you can file a second amended return to get it back.