Dependent Care Status Changes

[bzorc]

I have encountered the following two situations relating to dependent care coverage. I am interested in whether people think these qualify as a change in status, thus allowing the participants in these cases to cease their dependent care pre-tax deductions:

1. A child who the parent thought would be in daycare in August, 2001, now realizes that the child will not be in daycare after all, and signed up to cover the cost at the beginning (1/1/2001) of the plan year.

2. Parents who had a child in day care because both parents worked during the day. One parent has been transferred to the night shift, and now the parents have the ability to watch the child themselves. The child was in daycare, and now due to the change in the one parent's work hours, now does not need to be in daycare.

Any help or assistance would be appreciated.

Thanks.

[SLuskin]

Your first example is not a family status change. It is the same as electing $2500 for lasik and then finding out that you are not a candidate. The IRS position on this is "too bad".

Your 2nd example is a status change, and I would permit the participant to change the election. Note that the regs do permit daycare if 1 parent works the dayshift and 1 works the night shift. and they have accounted for sleeping time.