Resources
- 2014 Form 2441, Child and Dependent Care Expenses
- Instructions, 2014 Form 2441
- IRS Publication 503: Child and Dependent Care Expenses
Why YOU Should Care
If you receive dependent care benefits from your employer, the amount of your Child and Dependent Care Credit may be reduced.
What are Dependent Care Benefits?
Dependent care benefits include:
- Money paid by your employer either to you or directly to your care provider
- The fair market value of a daycare center provided or sponsored by your employer (i.e., what you’d pay if the service wasn’t subsidized).
- Pre-tax contributions you made under a dependent care flexible spending arrangement.
If your salary was reduced by the amount of dependent care benefits this amount will be reflected on your annual W-2 with the amount of the reduction listed in box 10. This amount should be entered on Part III, Line 12 of the Form 2441.
Depending on the type of the plan provided by your employer, you may be able to exclude dependent care benefits from your salary income. This exclusion is capped at $5,000 a year and any additional benefits will be included in income.
Impact of Dependent Care Benefits on Credit Dollar Amount
If you received dependent care benefits at work that are excluded or deducted from your income, you must also reduce the dollar limit of the credit by the amount of the benefit. For example, if you received $1,200 of dependent care benefits from an employer for care of one child, your credit limit is reduced from $3,000 to $1,800.
