Dependent Care Assistance

[Guest tws]

Day care provider charges $225 per week, regardless of how many days the child attends. During one week the employee-parent works three days and child attends day care for those three days. Employee parents requests reimbursement for $225 which is the amount they had to pay the day care provider for that week. Should reimbursement be limited to $135 (three- fifths of the $225)?

[jsb]

Under this logic, when the parent has to pay for care, but stay home with the child because of the child's illness, that day would not be reimbursed. ?? Same for provider's paid sick day??

It cost the parent $225 for day care for the 3 days worked. Reimburse it.

($5000 divided by 12 is $417 per month, which is way less than the $900 per month your employee is paying for care. Unless you are reimbursing before money is withheld from pay, I'm not sure why this is even an issue.)

[Guest tws]

My concern is that IRS regulations say dependent care expenses must be employment related and to be considered employment related they must be incurred to enable the employee to be gainfully employed. IRS Publication 503 says "Do not count as work related expense amounts you pay for child and dependent care while you are off work because of illness. These amounts are not paid to allow you to work. This applies even if you get sick pay and are still considered an employee".

[Steve72]

But the cost to the employee to "enable the employee to be gainfully employed" is $225. The fact that there would be no additional expense if the employee were to utilize the services when he or she were sick should not affect the reimbursability of the expenses.

[mroberts]

Agreed. Even if the employee had his or her child in the day care one day per week, the cost is still going to be $225. Therefore, the full allotment should be reimbursed.

[Guest M L Sullivan]

TWS - the rule you are referring to - regarding not allowing reimbursement when the employee is sick, is referring to such things as leaves of absence. For example, when I was on maternity leave, I was not able to received the dependent care reimbursement benefit because I was not working.

If the employee had to pay $225 regardless of the number of days the children were cared for, then I'd reimburse it.

[Lisa Hand]

One quick note

$5,000.00 12 = $416.66, not $417.00.

If the $417.00 number was used then you would be $4.00 over the $5,000.00 calender year limit, granted a small amount, but still over the limit.