Employee Reimbursements, Form W-2, Wage Inquiries
This is archived information that pertains only to the 2002 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
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)?
There is limited information about cafeteria plans in Publication 535 (PDF), Business Expenses.
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 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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