8896 / What reporting requirements apply in connection with amounts paid by an employer under a dependent care assistance program?

The employee must identify on the tax return all persons or organizations that provide care for the employee’s dependent. This includes the name, address, and taxpayer identification number of the person (name and address in the case of a tax-exempt 501(c)(3) organization) providing the services. If the employee does not have the information, then the employee can use form W-10, Dependent Care Provider’s Identification and Certification to request this information from the provider. The IRS may disallow a credit to an employee who fails to provide this information unless the taxpayer can show that he or she exercised due diligence in attempting to obtain the information. To show due diligence, the taxpayer should attach a statement explaining that the provider refused to complete the W-10.¹

As is the case with employer-provided educational assistance programs, the IRS has suspended the reporting requirements that are otherwise applicable to dependent care programs until further notice.²

Prior to this suspension, IRC Section 6039D generally required an employer maintaining a dependent care assistance plan to file an information return with the IRS that provided:

(1) its number of employees;

(2) the number of employees eligible to participate in the plan;

(3) the number of employees participating in the plan;

(4) the number of highly compensated employees (“HCEs”) of the employer;

(5) the number of HCEs eligible to participate in the plan;

(6) the number of HCEs actually participating in the plan;

(7) the cost of the plan;

(8) the identity of the employer; and

(9) the type of business in which it is engaged.

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1. IRC § 129(e)(9).