Tax Question: Box 10 on W-2 Form (deduction, expenses, credit, money)

[ansky]

I have a question about Box 10 on the W-2 (Dependent care benefits). I contribute $4,000 per year and my employer contributes $1,000. So Box 10 on my form says $5,000.

Here's the part that doesn't make sense. When entering my daycare expenses into TurboTax I get the following message: "You have $5,000 of employer-provided care benefits. In order to receive this credit, your expenses below must be more than this amount."

This makes no sense. How do I have $5,000 of "employer provided" care benefits. $4,000 of it is my money that I set aside. My employer only contributed $1,000. Any ideas what I should do here?

[Lowexpectations]

You set 4000 aside pretax and your employer contributed 1000. Are you expecting to set your 4000 aside pretax and use the same expense as a deduction? The dca is an employer provided benefit

[ansky]

Maybe I don't fully understand how DCRA plans work. So the $4,000 I set aside last year did not get taxed as income. So do I owe the taxes now, at the end of the year on my return, or I never pay taxes on that $4,000?

[Lowexpectations]

Originally Posted by ansky

Maybe I don't fully understand how DCRA plans work. So the $4,000 I set aside last year did not get taxed as income. So do I owe the taxes now, at the end of the year on my return, or I never pay taxes on that $4,000?

As long as you spend the money on eligible expenses you never pay income tax on that money. You can write off additional expenses if they exceed the 5k that's why it's prompting you the way it is

[Bradmilano]

Your employer allows you to sock away money pretax for dependent care expenses. Therefore it's an employer provided benefit.