As we enter the busy fall season, we wanted to remind everyone about significant savings for families with childcare expenses: the Dependent Care Account (a.k.a. "Flexible Spending Account"). Companies that offer this tax-saving benefit to their employees typically conduct their "open enrollment" period during the final 2-3 months of the year - although often times it is not well publicized within the company. During this time, families can elect to have up to $5,000 of their 2011 childcare-related
expenses paid for with pre-tax dollars, which translates into a savings of $2,100-$2,300 per year. In order to take advantage of this benefit, families should talk to their HR department immediately.
Additionally, some families may be able to take advantage of this tax break during 2010. Many companies have an exception to the standard open enrollment period for "life changing events" - such as the birth of a new baby - allowing enrollment if it is within 30 days of the baby's birth date. So if you have families with newborns who want to take advantage of this benefit, it's important for them to act quickly.
For assistance with incorporating the Dependent Care Account savings into families' budgets, please visit our Employer Budget Calculator at http://www.breedlove-online.com/.
Quick Tax Facts
$1,700: Social Security and Medicare reporting threshold
$1,000: Unemployment reporting threshold (some state thresholds are lower)
$2,500: Total tax breaks available for families who pay legally
1.5: Pay rate when live-out employees work more than 40 hours in a 7-day work week
$0.50: Mileage reimbursement rate
$7.25: Federal minimum wage (some state rates are higher)
55: IRS estimate of annual hours needed to manage household payroll and tax compliance process
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