| This sounds bogus to me. The IRS would certainly go after a $5000
benefit on the grounds that it was compensation, and therefore taxable
as income. Before pushing for this, get information from an IRS
office--don't assume that a Boston TV show has accurate tax
information.
John Sauter
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| Read the same thing in a magazine recently (Working Mother, I think).
The only caveat there was that if you forecast $5000 in child care
expenses, but only pay out $2500, you forfeit the rest - the advice
was to estimate conservatively, and deduct expenses over the estimate
on the tax forms.
Sounded like a win-win situation. How do we get DEC to consider
it?
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| Nope, this definitely isn't bogus. My prior employer offered
administering this stuff as a service and apparently does well in this
business.
The before-tax deductions aren't limited to DCAB. As I recall (it's
been a while, though), there's also MRB (Medical Reimbursement
Benefit), MI (Medical Insurance Benefit), LI (Life Insurance Benefit),
and others that I'm sure I've forgotten.
The way it works: You need to determine, up front, what your costs will
be during the year (if there is money left over afterwards, you do get
it back but must claim it via valid claims). Then there are payroll
deductions to pay into these funds. You can then set up automatic
monthly payments (good for DCAB, say) or you can submit claims (similar
to JH Medical Insurance). MRB is nice because it can cover what MI
doesn't (for example, it can cover the other 20% than JH won't).
I don't have dependents, but DEC may indeed take a form of this right
now: If you have dependents covered on Medical Insurance (and you must
pay a fee), are those fees taxed? Also, I believe that the Digital
SAVE program is a form of this (SAVE funds are before-tax, aren't
they?) In fact, DEC distributed a memo a while ago that talked about
these cafeteria plans: The federal government is looking into
restricting these types of plans significantly and DEC suggested that
you write your congress-person and state your feelings on the
usefulness of the SAVE program (and related plans).
In any case, this is real, not bogus. For how long? Who knows:
Perhaps forever, perhaps one year. You can't tell how tax laws will
change in the future. Who do you negotiate with to get these
deductions? I'd probably think that personnel would be a good start.
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