IRS Updates Form W-2 for 2021 Dependent Care Changes

 

Under the American Rescue Plan Act (ARPA), employers had the option to allow a temporary increase in dependent care contributions for the 2021 plan year.  The maximum amount of $5,000 was increased to $10,500.  For those employers who adopted this provision, please be aware the IRS has updated Form W-2 and employee instructions on their website on how to complete Box 10, Dependent Care benefits.  The $5,000 limit has been removed from the instructions with a reminder of the allowable increased amount of $10,500 or $5,250 for separate filers.  Updated instructions can be found here on the IRS website.

Please note: the temporary Dependent Care FSA contribution increase ends December 31, 2021.  If your plan didn’t elect this provision, please complete your W-2, Box 10, as you normally would.