Under IRS Code §129, employers can exclude up to $7,500 ($5,000 before 2026) from an employee's wages for a dependent care assistance program. This amount can include the fair market value of care in a day care facility provided or sponsored by the employer or amounts withheld through a §125 cafeteria plan and paid directly to the provider.
The entire amount paid or incurred by the employer will be reported in Form W-2 Box 10, Dependent care benefits. The wages reported in Box 1, 3 and 5 will be reduced by the excludable amount.
If an amount is entered in Form W-2 Box 10, Form 2441, Child and Dependent Care Expenses, needs to be completed. Form 2441 is used to reconcile the excluded employer benefits with the allowable deduction and determine if the taxpayer is eligible for any additional child and dependent care credit.
The amount entered in Box 10 of the W-2 will flow to Form 1040 line 1e and will adjust based on the information entered in Form 2441
To complete Form 2441 in the individual income tax return in TaxSlayer ProWeb, from the Federal Section of the return select:
- Deductions
- Credits
-
Child and Dependent Care Credit
- Care Provider Information - Enter the care provider's information.
- Recipient(s) of Care - Check the box next to the dependent cared for by the provider entered, then enter the amount paid to the provider for this dependent. If care was provided to qualifying individuals not entered as dependents in the return, enter their information, and upon returning to the recipients menu check the box and enter the amount paid. When finished entering dependent information, select CONTINUE.
- Child and Dependent Care Provider Summary - If you have another care provider to enter, select + Add a provider and enter the information, otherwise select CONTINUE.
-
Child Care Questions - Answer the yes/no questions:
- Dependent Care Benefits - If the taxpayer received dependent care benefits from their employer not reported on Form W-2, select Yes then enter information about the benefits.
- Disabled or Full-Time Student Exception - If the taxpayer or spouse were unable to work due to either disability or being a full-time student, select Yes then enter the number of months.
- Delayed Care Payments - If any care expenses for the previous year were paid in the current year, select Yes then enter information about the payments.
TaxSlayer Pro strives to make the information on this page timely and accurate but makes no promise or guarantee about the timeliness, accuracy, or completeness of the contents of this page. This is general information and is not intended to be tax advice. You are encouraged to also review the underlying federal resources and publications.
Additional Information:
ProWeb: Child And Dependent Care Expense Credit
Form 1040 - Why is DCB Printing on Line 1?
IRS Publication 17, Your Federal Income Tax
IRS Publication 503, Child and Dependent Care Expenses
IRS Tax Topic 602, Child and Dependent Care Credit