Guest Melissa Winslow Posted September 21, 2000 Posted September 21, 2000 Can someone please confirm/answer the following for me... The maximum reimbursement that can be taken under 125 plan is $5,000. If two working spouses each have 125 plans at their respective employers, can each spouse be reimbursed for $5,000 under each separate plan (for a maximum of $10,000 as a taxfiler - 1040)? Or, is the family limited to a reimbursement of $5,000 as a whole? Example: A married filing joint taxpayer, with both spouses working, has two children in daycare. Costs for both children is approximately $15,000 per year. The reading I have done seems to indicate that only $5,000 of the the $15,000 could be reimbursed through only one of the two 125 plans. Is this correct? Cites either way would be appreciated.
Joe Priselac Posted September 21, 2000 Posted September 21, 2000 In your scenario the limit is $5,000. The combined limit for a working couple is never more than $5,000, but it can be less depending on the circumstances.
Guest Lee Ann Jenkins Posted September 22, 2000 Posted September 22, 2000 The maximum is per "tax return", not per DCAP account. If a married couple files a joint return, the max is $5,000, but not more than the wages of the lower-earning spouse. If a married couple files separate returns, each one's maximum is $2,500, unless one of them earns less. About the only time it would be less could possibly be if one of them was a student, or part-time worker. The potential participant needs to be made aware of this but, if they happen to mis-calculate, they can correct it on their tax return by including the extra amount withheld as taxable earnings.
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