11.

Question

Why does my Form W-2 report a benefit of $3,000 in box 10 when my employer set aside $3,000 in wages for dependent care under a dependent care assistance plan?

Answer

When you choose to participate in a dependent care assistance program through your employer, your employer has to report that value in box 10 of your Form W-2. This type of plan is a voluntary agreement to reduce your salary in return for an employer-provided fringe benefit.

You're receiving a tax benefit because under the plan, you're not paying taxes on the money set aside to pay for the dependent care.

A. true

B. false