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Both my and my husband's employers offer Pre-Tax Dependent Care accounts. Each account allows pre-tax payroll deductions for qualified childcare for dependents. These deductions are held in the employer's account and are re-imbursed to the employee after approved childcare receipts are submitted. Each account has an annual max deduction of $5000.00. My question is: Can we use both accounts to effectively raise our combined annual limit to $10,000.00? In other words, if we have two dependents with annual care expenses of $5000.00 each, can we both take advantage of these accounts at our respective employers? Or, will be penalized at the end of the year when we file our W-2's with our tax returns?

Thank you.
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Both my and my husband's employers offer Pre-Tax Dependent Care accounts. Each account allows pre-tax payroll deductions for qualified childcare for dependents. These deductions are held in the employer's account and are re-imbursed to the employee after approved childcare receipts are submitted. Each account has an annual max deduction of $5000.00. My question is: Can we use both accounts to effectively raise our combined annual limit to $10,000.00? In other words, if we have two dependents with annual care expenses of $5000.00 each, can we both take advantage of these accounts at our respective employers? Or, will be penalized at the end of the year when we file our W-2's with our tax returns?

***In any case, the maximum allowable for credit is $4800. ($2400. per dependent with a maximum of 2 allowable for this purpose). Excess amounts distributed to either you or your spouse would become taxable. Use Form 2441 to calculate your allowable credit and any amount of taxable income.

"Jack"

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Your pre-tax payments for child care expenses are
quite a benefit. As long as your employers are paying (one of Your benefits) for the child care, you can use both plans to be reimbursed. The amounts your employers provide will be on your W-2's, (box 10) and filing the Child Care Credit (form 2441) will account for these payments. The Key word is
reimburse - this is not taxable income.
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After reviewing Form 2441 more closely, I think I have the answer to my questions. Section III of this form will exclude any benefit above $5000.00. In my previous example, we could have $10,000.00 withheld from our paychecks, but $5,000.00 would be declared a taxable benefit and included on line 7 of Form 1040.

Thanks.
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