Some companies offer dependent care benefits as part of your employee benefits package. You can find any child or dependent care benefits your employer paid for in box 10 of your W-2 tax form.
Dependent care benefit plans let employees contribute pre-tax dollars into an account to pay for qualifying dependent care expenses — such as day care, preschool, in-home care, elder care, dependent transportation services, and more.
Employers that offer this benefit will provide them through a Flexible Spending Account, or FSA. Employees who enroll in this benefit can choose how much money should be withheld from each paycheck. Your employer may also contribute to this account as part of your workplace benefits package. Just be aware, there’s a federal maximum of $5,000 per year across employee and employer contributions.
You can then access this money through your FSA account via debit card to pay for eligible child care expenses throughout the year. Eligible expenses must also be for a child or adult who is unable to take care of themselves, who live in your home, and are (or can be) claimed as a dependent on your federal tax return.
Any money the employee contributes is done pre-tax, which also reduces their taxable income. When you file your taxes, you’ll find the amount that was incurred or paid by your employer towards dependent care in box 10 of your W-2.