Employer Contributes $1,200 to DCFSA but I don’t contribute anything

[dash8484]

If my employer contributes $1,200 and I don’t contribute at all, what happens during tax season? If I spend the $1,200 from my employer, do I need to report how I spent the $1,200 to all the people that watched my two kids?

[Bsch4477]

Since the child care amount was pretax you are not eligible for child care credit unless you paid more than that amount.  See additional edited reply for reporting. 

[dash8484]

Thank you! So I’m taking that as I don’t need to report it then? Will my employer include that on a W2?

[Bsch4477]

That amount will be in box 10of your W-2. You will be prompted to complete form 2441 to report that the amount was spent on child care and to determine if you are eligible for child care credit if you spent more than that. You would report the name and tax ID of the child care provider as well as their address. 

[dash8484]

So regardless if I only spent $1,200 or did more, I would need to fill out that form? Furthermore, once I fill that form out how does that affect the other party if I am or not eligible for the credit?

I should add that this isn’t a direct daycare either. They are two individuals I used watched my kids while both my wife and I worked. 

[Bsch4477]

You fill out the form to tell the IRS that the money you got from your employer was spent on child care. Whether or not you get child care credit is irrelevant to your child care providers who bear the responsibility of reporting that income. The fact that you are reporting their name and tax ID to the IRS should put them on notice. 

[dash8484]

Thank you. I’ll make sure they report the income.