Employer-provided Dependent Care Benefits

Some taxpayers may be able to exclude employee-provided dependent care benefits from their income. Dependent care benefits include amounts an employer pays either to the taxpayer or directly to the care provider. Employer-provided dependent care benefits appear on the taxpayer's Form W-2, box 10.

The taxpayer may still be able to claim a child and dependent care credit, but the amount of excluded benefits is not included in work-related expenses and also reduces the dollar limit for the credit. Taxpayers who receive dependent care benefits must complete Form 2441, Part III, even if they are not eligible for a child and dependent care credit.