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Discussion:W2 box 10 daycare expense

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Discussion Forum Index --> Tax Questions --> W2 box 10 daycare expense


Schenckdmm (talk|edits) said:

10 March 2014
I've experienced my first with W2 box 10 showing $3800. Client says employer didn't provide daycare but offered TASC reimbursement. This amount raised her taxable wages by the $3800 over what her W2 shows in box 1 and put DCB next to "Wages" on 1040, line 7.

1. Shouldn't that be pretaxed and not increase her wages? It was withheld from her wages.

2. Would she be eligible for the Dependent Care Credit as well?

Ckenefick (talk|edits) said:

10 March 2014
Look at Form 2441. Namely, Page 2. It's pre-tax, but if you don't prove you spent the money on day care, it's taxable. Fill out the 2441 and you'll see.

STG (talk|edits) said:

11 March 2014
Don't try leaving it off. IRS doesn't miss that one. Don't ask how I know (I allow myself one mistake a year - don't ask how that goals working out.)

Doug M (talk|edits) said:

11 March 2014
Would she be eligible for the Dependent Care Credit as well?

No. Cannot have cake and eat it too. The dependent care expenses saved federal, FICA and state taxes. Cannot take credit also. It's origin is from an FSA/Cafeteria/125 plan election.

Taxaway (talk|edits) said:

12 March 2014
Would she be eligible for the Dependent Care Credit as well?

Not applicable here, but as an FYI for OP, taxpayer can have both when there are two qualifying individuals, eg, excluded DCB up to $5000, credit based on up to the remaining $1000, if daycare costs exceed the DCB. (Note the law does not require both children/disabled individuals to actually be in daycare either, even if only one is, allowed expenses are up to $6K). see clarifications below instead of me editing this sentence.

EZTAX (talk|edits) said:

12 March 2014
Agree with STG - watch out for box 10 or it will bite you!

Taxaway - I am not sure you are correct with your second statement - I thought both had to have at least some daycare expense for this to work. But it is an important "trick". Total daycare cost 10k. One kid enrolled so limit is 3k (if going for the credit). If second kid has $100 in daycare costs then you get the credit on the full 6k.

Taxaway (talk|edits) said:

12 March 2014
Actually I was in the middle of editing that sentence when you posted (fast!) but you corrected what I was going to edit.

Doug M (talk|edits) said:

12 March 2014
If you underestimated your costs, the excess paid above and beyond box 10 is eligible for the credit, assuming all other conditions met.

Schenckdmm (talk|edits) said:

12 March 2014
Thanks for the info!

Once I plugged in the information, the DCB disappeared on 1040, line 7, but the software would not allow the Dependent Care Credit, which appears correct as that would be a double benefit.

Schenckdmm (talk|edits) said:

12 March 2014
Thanks for the info!

Once I plugged in the information, the DCB disappeared on 1040, line 7, but the software would not allow the Dependent Care Credit, which appears correct as that would be a double benefit.

Ckenefick (talk|edits) said:

12 March 2014
Ensure that you obtained ALL dependent care expenditures from the client. If $2k was withheld, but client paid $3k, you would get a credit based on the difference.

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