4.6 Interest/Dividends/Other Types of Income: Employee Reimbursements, Form W–2, Wage Inquiries
What is meant by "dependent care benefits" (Box 10 of Form W-2)?
Dependent care benefits are amounts your employer paid directly to either
you or your care provider for the care of your qualifying person(s) while
you worked. They also include the fair market value of care in a day-care
facility provided or sponsored by your employer. Dependent care benefits include
amounts placed into a flexible spending account under a salary reduction arrangement
if the benefit provided was day care. If you have an amount in Box 10 of the Form W-2 (PDF), you must complete Form 2441, Child and Dependent Care Expenses (PDF) when you
file the Form 1040. If you file the Form 1040A (PDF),
complete Schedule 2.
References:
Should Line 10, Dependent Care Benefits, of my Form W-2 be included
when calculating my income?
A portion of the amount in Box 10 of the Form W-2 may be includable in
your income. Please refer to the
Instructions for Form 2441, Child
and Dependent Care Expenses, to determine how much, if any, of the dependent
care benefits may be excluded. If you meet the requirements described in Form 2441 (PDF), Child and Dependent Care Expenses,
you can exclude up to $5,000 of dependent care benefits provided under a qualified
employer plan. However, this amount is reduced or eliminated if your earned
income (or your spouse's earned income) is less than $5,000, or if your child
is not under age 13. Any benefits that exceed the exclusion limit ($5,000)
are also includable in your income, and your employer should have included
these amounts in Boxes 1, 3, and 5 of your Form W-2 in addition to reporting
these amounts in Box 10. The amount you can exclude is figured and claimed
by completing Part III of Form 2441 or Schedule 2 of Form 1040A.
References:
12.3 Small Business/Self-Employed/Other Business: Form W–2, FICA, Medicare, Tips, Employee Benefits
What publications are available that would explain the taxation
policy for Flexible Spending Arrangements (FSAs)?
Information on Flexible Spending Account and Cafeteria Plans can be found
in the following sources listed below:
References:
When an employer provides day care assistance, should the employer's
contribution be reported in box 10 of Form W-2?
Yes. An employer reports dependent care assistance payments in box 10 on
Form W-2.
References:
Is an employer required to provide the IRS with a signed receipt
from a dependent care provider in order to release funds that are withheld
from an employee's pretax salary and deposited to a dependent care flexible
spending account?
The Internal Revenue Service does not specify a method for the documentation
of reimbursable expenditures. Good accounting and business practices should
dictate the type and sufficiency of documentation provided by employees who
claim reimbursable expenses. Please review the plan document to determine
if it specifies the type(s) of documentation acceptable.
References:
If an employer pays health insurance benefits for the employee and
dependents, are both the employee's and the dependent's benefits income to
the employee?
If an employer provides health insurance for the employees, the benefit
provided is generally not taxable to the employee. An employer can generally
deduct the cost of a group health plan on the "employee benefit programs"
line of their business income tax return.
Group health plan defined: This (including a self-insured plan) is a plan
that provides medical care to your employees, former employees, and their
spouses and dependents. The plan can provide care directly or through insurance,
reimbursement, or otherwise. The employer can exclude the cost of providing
group health insurance to an employee from his or her wages.
References:
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