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What should I do if my Dependent Care FSA amounts are inconsistent?

Personal Finance & Money Asked by Octavian on February 6, 2021

Box 10 (for dependent care FSA) shows $4423. I elected, contributed, and was reimbursed 5000 according to the benefit provider, but only actually had 4423 withheld according to the payroll provider. That’s 3 paychecks worth of missing contributions. I’m wondering if there’s something wrong that I need to get corrected, or if I’m just not understanding how this works. Does that mean my employer picked up the tab for the remainder? What implications does that have for taxes?

One Answer

Definitely follow up with your employer on that one. A common issue I suspect this year will be people who went on restricted or part-time status for a period of the year (due to budget cuts / office closure/ etc.) may not have had their FSA contributions removed (or, at least, accounted for) for those paychecks properly, and that may lead to issues like this in payroll reconciliation or when you get your W-2.

Talk to HR (or accounting, or whomever is the primary contact in your office for paycheck issues), and ask them to verify what your actual contribution was. If you end up claiming only $4423 on your 1040, it increases your taxable income slightly, and if you claim $5000 but the W-2 says $4423, the IRS will want to know why the amounts are discrepant.

It's very possible you didn't actually have $5000 withdrawn, but spent it, and as a result you may end up owing the balance when HR/Accounting figures it out down the line - you don't want a rude surprise. If you can verify the full amounts were withdrawn from every single paycheck, that would be ideal, but your employer should be able to tell you as well.

Ultimately, your hope is that everything was done right, and they just messed up the W-2, in which case they will issue you a corrected W-2.

Answered by Joe on February 6, 2021

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