The amount in box 10, Dependent Care Benefits, of your Form W-2 should generally not be included in your income calculation, provided it does not exceed the maximum exclusion limit. According to the retrieved information:
- Exclusion Limit: The maximum amount of dependent care benefits that can be excluded from your income is $5,000 ($2,500 if married filing separately). Any amount exceeding this limit must be included in your income.
- Reporting on Form W-2: Your employer is required to report the total amount of dependent care benefits provided to you during the year in box 10 of your Form W-2. If the benefits exceed the exclusion limit, the excess amount will be included in your wages shown in box 1 of your Form W-2.
- Form 2441: To determine the amount of dependent care benefits that can be excluded from your income, you must complete Form 2441. This form helps you calculate the excludable amount and any excess that must be included in your income.
- Taxable Benefits: If the dependent care benefits exceed the exclusion limit, the excess amount is taxable and should be included in your income. This excess amount will be reflected in boxes 1, 3, and 5 of your Form W-2.
In summary, you should not include the amount in box 10 of your Form W-2 in your income calculation unless it exceeds the exclusion limit of $5,000 ($2,500 if married filing separately). Any excess amount over this limit must be included in your income.
Sources:
Publication 17 (2023)
General Instructions for Forms W-2 and W-3 (2024)
1040 (2023)
Instructions for Form 8903 (12/2019)
Instructions for Form 1040-NR-EZ (2019)
Publication 503 (2023)
