Dcap

[Guest Neno]

What is the proper way to handle the following:

Employee elected to salary reduce $90 weekly to pay for child care. In September, the employee had a qualifying change which reduced the amount of the childcare from $90 to $50 per week, however, she did not notify her employer of this until December 1. Therefore she has been paid out more and had more taken out of her paycheck than she should have. The employer has put further deductions from her pay on hold but calculating out to the end of the year she will have overpaid and been over reimbursed $140. Does this amount become taxable to the employee and includible on the employee's W2. Also, does the employer need to calculate and pay payroll taxes on this amount? Who is responsible for paying the employee's portion of FICA after the fact?

Any help would be most appreciated.

[SLuskin]

I can understand how her payroll deductions could have exceeded what she intended, but how could her reimbursements exceed the amount that she had submitted and were approved? Also, the plan doc should state how many days after the status change the employee has to submit a change form. Changes should not be retroactive. I think she should just lose the money.