I think you want to report what was actually paid and let nature take its course.

Are you saying $5046 is showing up as taxable?

If so, do both spouses (assuming it is a MFJ return) have "earned" income showing up on Lines 4 AND 5 of Form 2441?

So they actually paid $9,954 total? Then all $9,954 goes on the children's dependency lines and the F2441. The $5,000 exclusion goes on line 10 of the W2.

I'll try a look into the crystal ball.  You entered $5,000 of box 10 DCB for two different W-2s, giving you a total of $10,000 DCB of which only $4,954 was spent.

For $46, I probably wouldn't care too much.  But how this is *supposed* to work is that your client may put in $5,000 but if only $4,954 was reimbursed by the plan and the rest either carried over or forfeited you need to make an entry to flow the $46 to Form 2441 box 14 to keep it from being reported as taxable.

The reporting on this stuff went a little sideways once they started allowing the 2 1/2 month grace period such that the W-2s have to be filed BEFORE the employer knows how much money will actually be reimbursed for the particular tax year.

Rick