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Subject:  Re: Pre-Tax Dependent Care Accounts Date:  7/26/1999  10:05 PM
Author:  TaxService Number:  17682 of 128043

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.


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