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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

Content is the opinion of the author and does not represent the position of any other person or entity. Information is from sources believed to be reliable but cannot be guaranteed.

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Dependent care reimbursement plan

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: How can my business offer tax-free dependant care reimbursements?

A: Your small business employee benefit plan can easily adapt a daycare reimbursement plan. These reimbursement plans are income tax free and are also free of social security tax and other wage taxes. If you contribute the maximum $5,000, this can save you over $2,000 in tax. To do this, you need to follow the simple steps required for any formal employee benefit plan recognized by the IRS. The cost to setup this plan is $150 at Freedom Benefits ( and you should plan to spend about $150 per year on accounting and keeping the plan up-to-date.


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