W-2 Box 10 $5000 ??

[artp]

Taxpayer stated that she had the employer withhold this amount from her pay on after tax basis. W-2 entries confirm this.  The employer then forwards this to the provider. Taxpayer also paid an additional $5400 directly to the provider.  When entering this into Drake the system treated the $5000 as employer provider and no dependent care credit. This does not seem correct or am I missing something? Should the W-2 be corrected?

[Yardley CPA]

Does the employer have a Flexible Spending Account?  Wouldn't the expenses be paid directly by the taxpayer, then the taxpayer would seek reimbursement through the plan for qualified expenses? 

Form 2441 would show the total expense incurred by the taxpayer and total amount paid...the amount of Box 10 would normally flow to line 12 of the 2441.  

[Roberts]

Just off the top of my head because I think I've only had one of these: Isn't box 10 free of federal tax already and the 2441 is just showing the IRS that you used it for child care? You don't get a credit when the money was already tax free? I could be completely wrong.

 

The one I had of these - the ex claimed 100% of the child care because the child lived with her so he was sort of screwed and got mad at me. Again, it's been a few years so it could be wrong.

[SaraEA]

Taxpayer is wrong that amount was withheld on a after-tax basis.  It is pre-tax (including FICA).  If she has two or more children in care, she is allowed $3k per child on the 2441, $6k for two.  Since she already received $5k tax free, she can claim the credit for the excess $1k.  If she only has one child in care, no credit.

[Pacun]

SaraEA is right...I will add that you need to have the children and the only ones that count are the one for whom you have paid child care and they are under 13 or permanently disabled.

 

 

[Hahn1040]

Be sure to complete the 2441.  The box 10 amount goes on the second page and, as others have said, nets out of the eligible expenses.

IF you don't show the expenses on the 2441, then the box 10 amount is added to wages on line 10.

Sometimes people don't give you the daycare expenses saying. "I used dependent care benefit for that"  Yes they did, but it needs to be reported on the return.

[Abby Normal]

On 2/22/2019 at 9:32 PM, Pacun said:

the only ones that count are the one for whom you have paid child care

I don't think that's true. I always list all qualifying children whether any care was paid for them or not. Never had a problem.

[Hahn1040]

Yes, Abby is correct.  One child can have zero expenses, as long as she/he is qualifying:  from 2441 instructions

To qualify for the credit, you must have one or more qualifying persons. You should show the expenses for each child in column (c) of line 2. However, it is possible a qualifying child could have no expenses and a second child could have expenses exceeding $3,000. You should list -0- for the one child and the actual amount for the second child. The $6,000 limit would still be used to compute your credit unless you have already excluded or deducted, in Part III, certain dependent care benefits paid to you (or on your behalf) by your employer.

 

AND above I meant wages on  line 7