I have a client with dependent care benefits in box 10 of his W2 and it is better for him to file married filing separately. On page 11-6 of the Tax Book 1040 Edition, it states that you can exclude the employers dependent care benefit from income unless the taxpayer qualifies to be considered unmarried, which he does not. Has anyone done this before on a tax return and where do you put the exclusion? Appreciate any help. Thank you.
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They start out being excluded already by virtue of not being included in Box 1 of Form W-2. However, you must complete Form 2441 (page 2) to demonstrate that the taxpayer is entitled to the exclusion and does not have to add the excluded amount back into income on the wages line of the income tax return. In the case of MFS, the maximum exclusion is $2,500, so if they had at least $2,500 of qualified expenses and if their Box 10 amount is more than that, the excess will need to be added back with the notation "DCB" (dependent care benefits) on the wages line. Your software should do all this automatically once you enter the W-2 correctly and fill out the Form 2441.
One small benefit of the Box 10 amount is that is not subject to Soc Sec & Medicare tax even if none of it can be excluded on Form 2441."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard -
No, that's not what it says. It says the exclusion is only $2,500 instead of $5,000 unless the taxpayer qualifies to be considered unmarried.Originally posted by v.welty@comcast.net View Post
"You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe HowardComment
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