Child and Dependent Care Credit & Flexible Benefit Plans
Question: Why does my Form W-2 report a benefit of $3,000 in box 10 when my employer set aside $3,000 in wages for dependent care under a dependent care assistance plan?
When you choose to participate in a dependent care assistance program through your employer, your employer has to report that value in box 10 of your Form W-2. This type of plan is a voluntary agreement to reduce your salary in return for an employer-provided fringe benefit.
You're receiving a tax benefit because under the plan, you're not paying taxes on the money set aside to pay for the dependent care.
You must complete and attach Form 2441, Child and Dependent Care Expenses, to your tax return.
- Publication 503, Child and Dependent Care Expenses
- Publication 17, Your Federal Income Tax for Individuals
- Am I Eligible to Claim the Child and Dependent Care Credit?
- Instructions for Form 2441, Child and Dependent Care Expenses
- Tax Topic 602 - Child and Dependent Care Credit
Category: Childcare Credit, Other Credits
Subcategory: Child and Dependent Care Credit & Flexible Benefit Plans