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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?

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  • Go back to your pay stubs and tally up what they say. (Are you salaried or hourly?) – RonJohn Jan 13 at 19:48
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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It's very possible you didn't actually have $5000 withdrawn, but spent it, and as a result you may end up owing the balance when HR/Accounting figures it out down the line - you don't want a rude surprise. If you can verify the full amounts were withdrawn from every single paycheck, that would be ideal, but your employer should be able to tell you as well.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.

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  • All deductions were still fully withheld when I went on furlough for a week. That's not a guarantee of everyone, but i wouldn't be surprised if it is, especially for salaried workers. – RonJohn Jan 13 at 19:49
  • Thank you - this led me down the right rabbit hole. There was a while where our paid schedule got disrupted, and it does look like the payments were not deducted then. So the 4423 is correct, and I owe my company some money that they paid on my behalf to the benefits company. Assuming they tell me not to worry about it (which happened last time when there was a different insurance mistake), does that have any tax ramifications? I spent well over 5000 on childcare. – Octavian Jan 13 at 19:50
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    @Octavian there might be a tax ramification in that the reporting may need to be updated. Your company (and you) will report the $4423 dependent care FSA as deductible. No issues there. However, if you don't pay the $577 back to the company, in theory they should tack that amount on to your W2 as additional compensation received. – TTT Jan 13 at 22:20

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