Correct. If you used the money for allowable child care expenses then it is not taxable. When you have dependent care benefits (DCB) on your W-2 in Box 10, this is not taxable income unless you do not qualify for the child and dependent care credit. Education. Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. IRS Publication 503You must complete the Child and Dependent Care so that TurboTax knows you did spend the money for child care. To enter your childcare information and file a Form 2441 in TurboTax account (Online or CD/Download): Sign in to your account > in the search box (upper right) , type in childcare and Enter Select Jump to childcare Continue to enter your information for your child/children

Question

Why is my dependent care FSA being taxed? I contributed to a FSA pretax. Then I took money out of FSA to pay for preK. w2 Box 10. I thought this was to not pay tax??

Forum|Forum|4 years ago
March 24, 2022
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D

DianeW777

Correct. If you used the money for allowable child care expenses then it is not taxable. When you have dependent care benefits (DCB) on your W-2 in Box 10, this is not taxable income unless you do not qualify for the child and dependent care credit.

Education. Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care.
IRS Publication 503

You must complete the Child and Dependent Care so that TurboTax knows you did spend the money for child care.

To enter your childcare information and file a Form 2441 in TurboTax account (Online or CD/Download):

Sign in to your account > in the search box (upper right) , type in childcare and Enter
Select Jump to childcare
Continue to enter your information for your child/children

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J

jlhcunninghamAuthor

Thank you!

When I go through the questions, it kicks me out and does not allow the credit after the "student" questions. We are a single income family. One spouse works, one stays home with children, one child goes to preK. So does that mean that we are not able to use the dependent care FSA?

R

RaifH

Correct. Both spouses must either work, be looking for work, or be full-time students to realize the benefits of a dependent care FSA or the Child and dependent care credit unless one of the spouses is physically unable to care for the children while the other works.