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Conference 7.286::digital

Title:The Digital way of working
Moderator:QUARK::LIONELON
Created:Fri Feb 14 1986
Last Modified:Fri Jun 06 1997
Last Successful Update:Fri Jun 06 1997
Number of topics:5321
Total number of notes:139771

3958.0. "HCRA and DCRA may not be tax exempt" by SEND::REHBEIN () Mon Jun 26 1995 19:33

    To whom may be interested.
    
    About 6 weeks ago, I received a notice from the IRS claiming the
    Digital dependent care and health care reimbursement accounts were
    not tax exempt and all monies in those accounts are considered ordinary
    income. Reason, Digital marks the monies in box 11 on the W2 which is 
    labeled company benefit. Hence the IRS wants the owed tax money.
    
    I contacted personnel and they were of no help. I have since contacted
    a lawyer and having done research on my own and obtained information
    from the handouts which are sent home, responded, opposing the IRS 
    decision. 
    
    Don't know what is going happen except, if the findings are against me,
    that means anyone else at DEC who participated will get taxed as well.
    I have no doubt I am a test case.
    
    Oh they are contesting the 1992 return. So I am sure they will follow
    with the 1993-1994 returns as well.
    
    carl
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3958.1QUARK::LIONELFree advice is worth every centMon Jun 26 1995 19:354
Are you sure it's not because you failed to file form 2441 for DCRA?  HCRA
doesn't show up on the W-2 at all, I believe.

					Steve
3958.2Support Bill Archer's proposalDPDMAI::EYSTERLivin' on refried dreams...Mon Jun 26 1995 19:531
    Wonderful argument for a national sales tax, isn't it?
3958.3QUARK::LIONELFree advice is worth every centMon Jun 26 1995 20:543
No.   It might say something for a flat income tax, though.

			Steve
3958.4YesDPDMAI::EYSTERLivin' on refried dreams...Mon Jun 26 1995 22:1528
> No.   It might say something for a flat income tax, though.
    
    Yes.    Although I think the flat income tax would be an improvement over
    the current 20,000 page mystery we currently have, a flat income tax
    still requires reporting of income and doesn't tax the profits of the
    black marketeers (ie: drug dealers, runners, etc.).  Mobil Oil, in
    recent congressional hearings on tax overhaul, submitted as evidence
    their 76 volume, 19,000 page return that cost $10 million to compile
    and took 56 man-years to create.
    
    I believe the majority of states already have collection means set up
    for sales tax, thus the infrastructure is already there and the
    requirement for a different Federal structure to serve the same purpose
    is negated (read: big cost savings).  Also, remember that our current
    lovely system started as a flat percentage, no deductions, on high
    income only.  I have faith the average pol can muck up anything more
    complicated than a stick.
    
    Adjustments to a sales tax code would be limited to:
    
    percentage
    items excluded (food and medicine in most states, clothing in others)
    items taxed at different percentages (currently tires, for example)
    
    Current efforts to implement a national sales tax also involve repeal
    of the 16th Amendment.  No tears there.
    
    								Brent
3958.5I appear to be OK...POBOX::CORSONHigher, and a bit more to the rightMon Jun 26 1995 23:5014
    
    	This could be its own Notes file; ie. MADHELL::TAXES.
    
    	For the most part, I pay taxes as an alternative to big legal fees,
    or jail.
    
    	The question about the HCRA is very interesting and sent me back to
    my tax forms. Can't find a notation anywhere. Must be the Dependent
    stuff, 'cause it isn't Health.
    
    	I'm I lucky, or just something else???
    
    
    			the Greyhawk
3958.6QUARK::LIONELFree advice is worth every centTue Jun 27 1995 01:295
    I looked at my W-2 - box 11 was empty.  Box 10 has the DCRA amount, and
    you must file a form 2441 if you want to avoid taxes on the part (or
    all) you spent on dependent care.  I see no entry at all for HCRA.
    
    					Steve
3958.7CSC32::K_MEADOWSTue Jun 27 1995 16:1910
    And don't forget that the first year it was available at DEC it was not
    for the whole year.  Unfortunately, I don't remember if this was 1992
    or not. 
    
    Also, if you or other parent did not earn more than what was spent on
    child care, it is not deductible.
    
    definitely get a tax advisor on it.  Maybe you just need to file an
    amended return.
    
3958.8tax questionMSBCS::HURLEYWed Jun 28 1995 13:355
    I have a question about Dcra. This year I changed my deductions from
    $4800 taken out to $3000. Some things have changed since January and it
    looks like my day care bill will be about $4000 for the year. Since I'm
    in the dcra program will I be able to deduct the $1000 differance on
    my taxes?
3958.9IP$16.65.80.19::S_WATTUMHell BentWed Jun 28 1995 13:536
Re .8

Take a look at form 2441 - that will tell you everything you want to
know.

--Scott
3958.10QUARK::LIONELFree advice is worth every centWed Jun 28 1995 14:309
Re: .8

Generally, the answer is "no". The only exception would be if you were at all
eligible to claim the partial deduction for dependent care, but I think with
the $3000 DCRA deduction already, you're ineligible (and even at best you'd
be able to deduct 20% of the overage.)  Do look at form 2441 to see how it
would work out for you.

				Steve
3958.11MSBCS::HURLEYWed Jun 28 1995 20:491
    ok I'll look at form 2441. Thanks for the advice.
3958.12LEEL::LINDQUISTPluggin' preyWed Jun 28 1995 21:224
    You might be able to get the form from:

    	http://www.ustreas.gov/treasury/bureaus/irs/irs.html
3958.13NETCAD::THAYERThu Jun 29 1995 16:107
	RE: .8

	With a change in family circumstances (job, marriage/divorce,
	etc.,) you are allowed to adjust your DCRA contributions.

				John