What do I need to do to print an amount in box 10 of the W-2 (Dependent Care)?

A: The employee must have an entry on the QTD/YTD totals screen with a Type of DPCR-5000 (or DPCR-2500), a Sub-Type of Federal and dollar amount entered for each of the 4 Quarters.

Let's look at the types of dependent care plans the IRS wants you to print in box 10.

In plain English there are:

• Plans where the employer pays for dependent care directly (including employer sponsored).
• Plans where the employer gives the employee extra money specifically to pay for dependant care.
• Plans where a portion of the employee's pay is deducted pre-tax and then paid by the employer on behalf of the employee.

To review the IRS guidelines, see the publication titled "Instructions for Forms W-2 and W-3". You can download a copy from www.irs.gov. See the specific instructions for "Box 10 - Dependent Care Benefits".

Verify Allowance Plans Setup
In each case you will need special Allowance Plans setup to get the program to report Dependent Care. Go to Payroll | Employer Setup | Allowance Plans. Look for a line that begins with "DPCR-". This is the program's internal abbreviation for Dependent Care. The amount after the dash represents the tax deductible limit (5000 or 2500 as of this writing). See IRS Publication 15 and search for Dependent Care for details. Amounts paid below the limit are not included in box 1, 3, or 5 of the W-2. Insert the lines if they do not already exist. See the sample below. Remember, the line MUST begin with "DPCR-" and end with a number representing the limit.

Note: You may not have the same name setup as both a Benefit Plan and an Allowance Plan. If you already have these activities setup as Benefit Plans, you will need to rename the Benefit Plan(s) before setting up the new Allowance Plans.

Employer Pays For Dependent Care Directly
In the case where the employer is directly paying for the Dependent Care, do the following.

Because the employer is paying the cost directly, you do NOT need to setup anything on the Master Paycheck for each participating employee.

After the last paycheck for the year has been printed, but BEFORE printing the W-2's for the year, make the following change on the Employee's QTD/YTD totals screen. Insert a new line. Select an account number. Select a Type of DPCR-5000 (or DPCR-2500), a Sub-Type of Federal and enter a dollar amount for each of the 4 Quarters. Enter 0.00 for any quarter where no costs were incurred. If amounts were paid over the limit you may need to insert additional line(s) but use a Sub-Type for your state and/or localities.

Employer Pays Employee Extra Money For Dependent Care
In the case where the employer is paying the employee extra to cover the costs for the Dependent Care, do the following.

Because the employer is paying the employee directly, you need to setup the Master Paycheck for each participating employee. On the Master Paycheck screen, insert a new line. Select an expense account number. Select a Type of DPCR-5000 (or DPCR-2500). Enter in the Fixed Amount column how much the employee will get. If they get this allowance each time they are paid, leave the Freq column blank.

As the employee is paid throughout the year, the required entries on the QTD/YTD totals screen will be maintained by the program. After the last paycheck for the year has been printed, but BEFORE printing the W-2's for the year, verify the amounts on the Employee's QTD/YTD totals screen. Look for the line with a Type of DPCR-5000 (or DPCR-2500), and a Sub-Type of Federal. Verify the dollar amount entered for each of the 4 Quarters. There may be additional lines with a Type of DPCR- and a Sub-Type for your state and/or localities.

Employee Pays For Dependent Care From Pre-Tax Payroll Deductions
In the case where the employee is having money deducted from each paycheck for the specific purpose of paying for the Dependent Care, do the following.

In this case you will need special Benefit Plans setup to get the employee's deductions pre-tax. Go to Payroll | Employer Setup | Benefit Plans. You can name the deduction type anything. However, there may not be any duplicate names between either the Benefits or Allowances (so don't name it "DPCR-####"). For example, you might choose a name like "125 Day Care". Check the taxes that this deduction will be exempt from. Check the plan guidelines and the IRS rules to see what taxes it is exempt from.

Because the money is deducted from each paycheck, you need to setup the Master Paycheck for each participating employee. On the Master Paycheck screen, insert a new line. Select an expense account number. Select a Type of 125 Day Care (or whatever name you chose on the Benefit Plan screen). Enter in the Fixed Amount column how much will be deducted. If this money is deducted each time they are paid, leave the Freq column blank.

As the employee is paid throughout the year, the 125 Day Care entries on the QTD/YTD totals screen will be maintained by the program.

After the last paycheck for the year has been printed, but BEFORE printing the W-2's for the year, make the following change on the Employee's QTD/YTD totals screen. Insert a new line. Select an account number. Select a Type of DPCR-5000 (or DPCR-2500), a Sub-Type of Federal and enter a dollar amount for each of the 4 Quarters. The dollar amount for each quarter should match the dollar amount for the line already entered with a Type of 125 Day Care and a Sub-Type of Federal. Enter 0.00 for any quarter where no costs were incurred. If there are additional line(s) for the 125 Day Care with a Sub-Type for your state and/or localities then you will need to setup additional lines for your state and/or localities for the DPCR- entry too.

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