TT making my DCFSA contributions taxable

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GreendaleCC
Posts: 1068
Joined: Sun Dec 22, 2019 2:24 am

TT making my DCFSA contributions taxable

Post by GreendaleCC »

I've read through the old threads regarding Dependent Care FSA vs Dependent Care Tax Credit, but I still don't completely understand the situation I'm facing.

I've entered my W-2 in TurboTax, which is taking my $5,000 payroll deduction to my employer's Dependent Care FSA (cafeteria plan) and seemingly adding it back into taxable income by placing it in Form 1040's Row 1e (Taxable dependent care benefits from Form 2441, line 26).

Why am I forced to itemize my dependent care expenses for the tax credit in order to receive a deduction for my DCFSA contributions? TurboTax only made this an issue for me starting last year, and I'm not sure why.

What am I missing here?
BogleTaxPro
Posts: 605
Joined: Sat Apr 04, 2020 6:08 pm

Re: TT making my DCFSA contributions taxable

Post by BogleTaxPro »

GreendaleCC wrote: Sun Feb 11, 2024 4:10 pm I've read through the old threads regarding Dependent Care FSA vs Dependent Care Tax Credit, but I still don't completely understand the situation I'm facing.

I've entered my W-2 in TurboTax, which is taking my $5,000 payroll deduction to my employer's Dependent Care FSA (cafeteria plan) and seemingly adding it back into taxable income by placing it in Form 1040's Row 1e (Taxable dependent care benefits from Form 2441, line 26).

Why am I forced to itemize my dependent care expenses for the tax credit in order to receive a deduction for my DCFSA contributions? TurboTax only made this an issue for me starting last year, and I'm not sure why.

What am I missing here?
Hmm. I'm not using TurboTax this year so I can't give you the exact steps. You shouldn't have to 'itemize' for DCFSA the way you do for the Dependent Care Tax Credit...but you do have to tell TurboTax somewhere the overall amount of qualified expenses you had. It may be asking you to 'itemize' because some people have enough expenses to qualify for both, and TT wants to sort it out. Go through that process and see if it figures it out correctly. You can also post your question on the TurboTax Community Forum https://ttlc.intuit.com/community/file- ... ion/03/303.
redalert102
Posts: 2
Joined: Mon Dec 09, 2013 1:16 pm

Re: TT making my DCFSA contributions taxable

Post by redalert102 »

I very recently filed using Turbo Tax with a DCFSA. In the tax credits/deductions area of the software, you do have to enter your total dependent care costs. Only after that, does Turbo Tax properly deduct your DCFSA contributions.

It will also automatically determine whether you are eligible for the dependent care tax credit. If like me, you used all $5000 of the DCFSA, and only had 1 qualifying dependent, you won't be eligible for the tax credit.
Topic Author
GreendaleCC
Posts: 1068
Joined: Sun Dec 22, 2019 2:24 am

Re: TT making my DCFSA contributions taxable

Post by GreendaleCC »

Thanks, everyone!
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