Dependent Care Benefits

[JT2307]

Taxpayer receives dependent care benefits (box 10) - but he does not claim the dependent but does pay the daycare. my question is will they have to be included in their income? or is there a way around it.

[Twin Turbo Z]

No its not taxable if they pay daycare expenses. One does not have to claim a child to claim daycare expenses. Should be a code on the dependent entry screen to not claim the child as a dependent, but claim the expenses.

[JT2307]

Great - I will have to check my software. Thank you.

[TaxGuyBill]

No its not taxable if they pay daycare expenses. One does not have to claim a child to claim daycare expenses. Should be a code on the dependent entry screen to not claim the child as a dependent, but claim the expenses.

I partially disagree. Aren't the rules the same as the Dependent Care Credit? If so, unless the exemption has been given to the other parent by means of Form 8332, the parent DOES need to claim the child.

[kathyc2]

The dependent care benefits and/or dependent care credit only goes to custodial parent. It doesn't matter which parent claims child.

[Twin Turbo Z]

I partially disagree. Aren't the rules the same as the Dependent Care Credit? If so, unless the exemption has been given to the other parent by means of Form 8332, the parent DOES need to claim the child.

True that. Many other stipulations apply too. I think the original post is talking about employer provided benefits. Maybe I am mistaken.

[JT2307]

True that. Many other stipulations apply too. I think the original post is talking about employer provided benefits. Maybe I am mistaken.

Yes I was talking about the employer benefits. He has money in box 10 but he doesn't claim the child but pays for the child care. Not looking for the credit just don't want the money to be part of his income.

Any more thoughts??

[New York Enrolled Agent]

Yes I was talking about the employer benefits. He has money in box 10 but he doesn't claim the child but pays for the child care. Not looking for the credit just don't want the money to be part of his income.

Based on your facts the money is included in gross income.

Good news is the taxpayer didn't pay any FICA/Medicare payroll taxes on the $5K (assuming he took the maximum).