Exclusion for dependent care benefits by both spouses

[mbozek]

IRC 129 provides for a exclusion of up to 5k for amounts paid or incured by an employer to a DCP program that meets the requirements of IRC 129(d). The definition of employer includes unincorporated businesses but has no aggregation requirement. Part III of Form 2441 provides for a deduction of up to 5k to a DCP program.

Q- Is 5k the maximum amount that can excluded by a married couple who file a joint return or can each spouse file a 2441 form and claim 5k? The instructions do provide any information on whether each spouse can file a separate 2441 since the IRC limit is a per employer basis.

[oriecat]

129(a)(2)(A) says:

(A) In general The amount which may be excluded under paragraph (1) for dependent care assistance with respect to dependent care services provided during a taxable year shall not exceed $5,000 ($2,500 in the case of a separate return by a married individual).

[mbozek]

Does this mean that the max exclusion for a married couple who file a joint return is 5k or that the max exclusion per employer for a married couple who file a joint return for a tax yr is 5k? Its not clear that the 5k limit relates to the taxpayers who receive the DC benefits (amt that may be excluded under paragraph 1), instead of the employer who sponsors the plan.

[oriecat]

I think I see what you're saying that the code isn't entirely clear that the exclusion total is for the taxpayer (as is my understanding). But if you work through the form 2441 on the back (line 22) it shows the max, so if you had more than allowed such as through multiple employers, then it would end up on the taxable benefits line below that.

[mbozek]

Yes that is what the form requires but the instructions do not prohibit the filing of a second 2441 by a working spouse for another 5k depenent care exclusion. I think the convention is that the max exclusion is 5k even though the statute applies the 5k exclusion on a per employer basis.