2021 W2 IRS Compliance Announcement For Dependent Care
On Nov. 23, 2021, the IRS updated the Box 10 Instructions for Employees verbiage on the 2021 Form W-2, because the exclusion amount for employer-provided dependent care increased from $5,000 to $10,500 ($5,250 for married filing separately) for any taxable year beginning after Dec. 31, 2020 and before Jan. 1, 2022 under the American Rescue Plan Act. Here’s what changed:
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“This amount includes the total dependent care benefits that your employer paid to you or incurred on your behalf (including amounts from a section 125 (cafeteria) plan). Any amount over $5,000 is also included in box 1. Complete Form 2441, Child and Dependent Care Expenses, to figure any taxable and nontaxable amounts.”
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“This amount includes the total dependent care benefits that your employer paid to you or incurred on your behalf (including amounts from a section 125 (cafeteria) plan). Any amount over your employer’s plan limit is also included in box 1. See Form 2441.” |
For more information, view the revised 2021 IRS general instructions for Forms W-2 here.
Thank You,
The Payroll Department