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Can anyone explain the logic of this one to me? After you reduce the total amount paid for child care by the amount that you funded a 125-c plan, you must further reduce it by the salary of one parent if it was lower than the remainder. So, a stay-at-home parent for one child will cause the working parent to be penalized by his or her salary, reducing the tax benefit of a 125-c used to pay daycare for another child. The IRS has confirmed that this is their intent, just could not give any explanation as to why?
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