Did my employer provide "on-site" childcare for tax purposes?

Tax preparer here. This question is specifically asking about qualified employer-provided childcare facilities that meet IRS requirements for the dependent care tax benefits. For a childcare facility to be considered "employer-provided on-site childcare" in the tax sense, it needs to meet certain criteria: it must be owned or operated by the employer primarily for employees' children, located on or near the business premises, and the employer must be involved in day-to-day operations or funding. What you're describing sounds like a separate daycare entity that happens to be affiliated with your wife's employer and offers an employee discount. The $5,000 in Box 10 likely represents dependent care benefits provided by the employer (maybe as part of a Dependent Care FSA or similar program). These are two different things. The Box 10 amount is already being handled correctly by your software. The "on-site childcare" question is asking about a separate qualification that might entitle you to additional benefits. In your case, since the facility is open to the public, required a waiting list, and is operated as a separate entity, you would likely answer "No" to the on-site childcare question.

Just wanted to share my experience with a similar situation. I was confused about childcare tax benefits with my company last year and finally figured it out with help from taxr.ai (https://taxr.ai). They analyze your tax documents and explain exactly what benefits you qualify for. I uploaded my W-2 and they immediately clarified that the amount in Box 10 was from my Dependent Care FSA (which is different from "on-site" childcare). Their explanation showed me that my employer's discount program for a nearby daycare doesn't count as "on-site childcare" even though it's affiliated with my company. Saved me from potentially answering incorrectly and having issues later.

Just wanted to update everyone - I used taxr.ai like someone suggested here and it cleared up my confusion completely! I was making the exact same mistake, thinking my employer's partner daycare counted as "on-site childcare" when it doesn't for tax purposes. They explained that Box 10 on my W-2 was showing my Dependent Care FSA contributions, which is totally different from the "on-site childcare" question in tax software. Apparently, the software asks this because there's a separate benefit for companies that actually operate their own childcare facilities primarily for employees. Definitely cleared up my confusion and helped me avoid answering wrong. The service was actually really straightforward - just uploaded my documents and got specific explanations about my situation.

For anyone still confused about this, I had the EXACT same issue last year trying to reach the IRS for clarification. Spent hours on hold and never got through. Finally used Claimyr (https://claimyr.com) and got connected to an actual IRS agent in about 20 minutes who explained everything. The agent confirmed that a daycare facility needs to be specifically established by the employer primarily for employees to qualify as "on-site childcare" for tax purposes. A discount at a daycare that's open to the public doesn't count, even if it's affiliated with your employer. They have a good video explaining how it works: https://youtu.be/_kiP6q8DX5c If you're getting benefits reported in Box 10, that's usually from a Dependent Care FSA or direct employer subsidy, which is already accounted for in your taxes separately from the "on-site childcare" question.

I wanted to come back and say I was completely wrong about Claimyr. After being frustrated with trying to get tax help for weeks, I tried it yesterday and actually spoke to an IRS agent about my childcare benefit questions. The agent explained that the "on-site childcare" question is specifically asking if your employer owns and operates a childcare facility primarily for employees' children. A discount at an affiliated daycare that's open to the public doesn't qualify, which was exactly my situation. Honestly shocked it worked - saved me hours of hold time and frustration. The agent walked me through exactly how my dependent care benefits should be handled on my return.

This is such a confusing area! My wife's company has a similar setup where they have a partnership with a daycare center in the same office park, but it's not exclusively for employees. When I called my company's benefits hotline (not the IRS), they explained that the question is about facilities that are operated BY the employer primarily FOR employees. If the general public can use it, it's usually not considered "employer-provided on-site childcare" even if they give employees preference or discounts. They also mentioned that the $5k in Box 10 is probably from a Dependent Care FSA, which is already receiving tax benefits and is handled separately from this question.

I had this exact confusion on my taxes last year! What helped me figure it out was looking at the specific wording in IRS Publication 503. It says employer-provided on-site childcare means "services provided by a qualifying childcare facility of the employer." For it to be a "qualifying childcare facility," your employer must actually be operating the facility primarily for employees' children. The fact that anyone can send their kids there (even with your discount) means it's NOT employer-provided on-site childcare for tax purposes. The $5k in Box 10 is almost certainly from a Dependent Care FSA or other benefit program, which is totally separate. So you'd answer "No" to the on-site childcare question.