Dependent Care Assistance Plan - Qualified Child

[luissaha]

We have an employee who files income taxes with his spouse as married - filing separately.  The spouse claims their child as her dependent (i.e., our employee does not claim child as dependent).  A question has come up as to whether or not dependent care expenses incurred for the child are eligible for reimbursement under our dependent care assistance plan.  The employee is arguing the child could be his tax dependent and otherwise meets the definition of a qualifying child, so the expenses should be reimbursed.  Our plan document defines "qualifying individual" as a tax dependent of the participant as defined in IRC section 152 who is under the age of 13 and who is the participant's child as defined in IRC section 152 (a)(1).  I guess my question is if the child can qualify as a dependent of the participant, but is not claimed as a dependent for tax purposes, could dependent care expenses for that child be reimbursed under the plan.  Any help would be appreciated.

[Bill Presson]

Based on what you've posted, I don't think they are eligible but I don't know if we have enough information. Review page 8 of IRS Publication 503. That should help. If not, you may need to contact a benefits attorney.