When you are eligible to participate in a dependent care assistance program through your employer and you choose to participate, your employer has to report that value in box 10 of your Form W-2. This type of plan is a voluntary agreement to reduce your salary in return for an employer-provided fringe benefit. Your employer will also include in your wages shown in box 1 of your Form W-2 any dependent care benefits that exceed the maximum amount of dependent care benefits allowed to be excluded. The maximum amount is $5,000 ($2,500 if married filing separately).

You're receiving a tax benefit because under the plan, you're not paying taxes on the money set aside to pay for the dependent care expenses.

You must complete and attach Form 2441, Child and Dependent Care Expenses to your tax return.