Which statement is incorrect regarding employer-provided dependent care assistance programs?

The correct answer identifies a misunderstanding about how dependent care assistance programs are reported for tax purposes. When an employer provides dependent care assistance, they are required to report the value of this benefit on the employee's Form W-2, specifically in Box 10. This includes any amount the employer contributed towards the dependent care assistance program, which is crucial for determining the employee’s taxable income.

Understanding the reporting requirement is essential because it impacts how the tax benefit is structured. The employee can indeed benefit from this assistance program without paying taxes on the provided amount, but it is important that it is accurately reported to ensure proper handling of any exclusions or deductions on the employee's tax return.

In contrast, the voluntary salary reduction plan and tax benefits associated with the dependent care expenses are valid characteristics of such programs. Additionally, the inclusion of nontaxable combat pay in earned income for exclusions directly impacts an employee’s earning calculations in relation to dependent care assistance, and thus, all of these components are designed to align with tax regulations while providing valuable financial support.