kamlet[at]panix.com (Arthur Kamlet) wrote:
- quote -

Employer sets eligibility rules; the ones I've seen are less
strict than the IRS rules. The usual difference is that the
employer doesn't inquire into the spouse's wages or the
"need child care to work" qualification, so somebody who is
willing to sail close to the reef apparently could use this
to save Social Security tax (though not income tax) on child
care paid through an FSA even though he's not eligible for
child care credit.

The OP still couldn't use his FSA for tuition of any sort,
because that's not eligible under any circumstances, and the
plan administrator should refuse to pay out for it.

Because amounts not used for the purpose of the FSA are
forfeited, this is only an indirect way of getting wage
income free of Social Security tax. You can't defer wages
into the FSA and get them out as cash; you can only get
expenses eligible under the plan reimbursed.

--
Chris Green

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Christopher Green <cj.green[at]worldnet.att.net> wrote:

- quote -

without being subject to FICA?

If so, an employee can sign up for child care FSA benefits knowing
he will not qualify, avoid FICA and just add that FSA amount -
$5000 or $6000 to wage income at filing time?

--

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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smithff33[at]aol.com (Herb Smith) wrote:

[snip]
- quote -

Dependent care expenses paid from an FSA are a special case.
These may or may not be tax free. To oversimplify, if the
expenses would have qualified for the child/dependent care
tax credit, they are tax free if paid out of an FSA. If they
would not have qualified (and the OP's expenses pretty
clearly don't qualify), they go back into income.

--
Chris Green

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smithff33[at]aol.com (Herb Smith) wrote:

[snip]
- quote -

That's right, it sucks, but the deduction is there for those
who are producing multiple incomes.

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Scott J. Chlebove <chlebsco[at]enter.net> wrote:

- quote -

The reason for the child care credit is to allow both you
and your wife to work. Only when the day care allows both
of you to work can any expenses be claimed, and then the
maximum amount of expenses will not be more than her Mary
Kay income.

See http://www.irs.gov/publications/p503/index.html

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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chlebsco[at]enter.net (Scott J. Chlebove) wrote:

- quote -

You can have an FSA under Section 125 for dependent care
benefits. Amounts you set aside for this purpose will then
appear in Box 10 of your Form W-2. Depending on your
situation, none, some, or all of this will be tax-free to
you.

The amount that is tax-free is the least of: the amount you
set aside less any forfeited amount, your qualified
expenses, your earned income, your wife's earned income, or
$5,000 ($2,500 if you file MFS).

Qualified expenses follow the usual rule for qualified
dependent care expenses, which you can find in Publication
503. Expenses must be for the care of your children so that
you or your wife can work or seek work. They must be for the
care, not for the education of your children, except in the
case of a preschool or kindergarten where education expenses
and care expenses can't be separated. Just on that point
alone, it sounds like none of your expenses qualify, but see
for yourself.

Private school tuition through grade 12 is a personal
expense, not a qualified child care expense or itemized
deduction. The IRS has taken a hard line on disguising
tuition payments as charitable contributions or anything
else. There are two exceptions: one, if the private school
is a special school that is medically necessary for your
child; two, private school expenses can be qualified
expenses for a Coverdell ESA. It doesn't sound like these
exceptions are of use to you.

See Form 2441 and its instructions, as well as FAQ 7.1
(http://www.irs.ustreas.gov/faqs/faq7-1.html) for details.

--
Chris Green

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chlebsco[at]enter.net (Scott J. Chlebove) wrote:

- quote -

Unless your spouse AND you are "at work, looking for work,
or a student", there is NO deduction or credit for day care
expenses. See the instructions to form 2440.

Expenses paid from an FSA are already "tax free", there is
no further deduction.

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- quote -

You would have daycare for the baby IF he goes to nursery
school while Mom works and makes a profit. And that's it.

Helen, EA in PA
I DID IT!
50 miles, 3 days, 1 cause - Multiple Sclerosis Challenge Walk for the Cure
October 1 to October 3, 2004

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I have three kids: for 2005, one is in 1st grade currently
and will be in 2nd in the fall at a private school; another
is in Pre-K now and will go to Kindergarten at that same
private school where the oldest attends, in the fall; my
youngest is in Nursery School (3 yr. olds) and will be in
the same (though, for 4 yr. olds) next year. Here's the
kicker, my wife is a stay-at-home mom - she does not work
outside of the home except for some minor involvement with
sales of Mary Kay cosmetics.

Does IRS section 125 provide that I am eligible to claim the
expenses for any or all of my kids school tuition???

Please sight the specific language in that section, if
possible. I can't seem to find it.

Thanks in advance for your help.

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