Dependent Care

[Guest javery]

We have a client who provides a daycare facility there. All employees who utilize that Daycare per the client automatically has the money coming out of the employees check with taxable money. If that employee wants the Dependent Care Account on FSA how would it work?

[Joe Priselac]

Jamie,

The company would adopt a Section 125 plan allowing employees to reduce their taxable incomes to pay for dependent care expenses on a pre-tax basis. If this is a company operated day care facility, the normal procedure of employees submiting of expenses could be dispensed with. The facility would have the record of who and for who much each participating employee utilized the facility. We have some clients in this situation. We write a check to the facility for all the employees instead of reimbursing each employee separately. For the employee it works similarly to a POP plan.