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posted: 11/22/2006 reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date.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 asktony@tonynovak.com.
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 (www.FreedomBenefits.org) and you should plan to spend about $150 per year on accounting and keeping the plan up-to-date.
Summary
More resources:
www.FreedomBenefits.org