6.5. ERMUSR 01-15-2008 - Laserfiche WebLink

Home Browse Search

Participant or $500 per month if there are two or more Qualifying Individuals with respect to the Participant. (e) Gainfully Employed means the earning of income for services performed or the period of active search for gainful employment. Nominal reimbursement for volunteer work is not considered gainful employment. (f) Highly Compensated Employees means Employees who are highly compensated as defined in Section 414(q) of the Code. (g) Non-Highly Compensated Participants means Employees who are not Highly Compensated Employees. (h) Qualifying Individual means any individual who is: (1) A dependent (as defined in Section 152(a)(1) of the Code) of the Participant under the age of 13; or (2) A Spouse or a dependent (as defined in Section 152 of the Code, determined without regard to subsections (b)(1), (b)(2) and (d)(1)(B) thereof) of the Participant who is physically or mentally incapable of self-care and who has the same principal place of abode as the Participant for more than one-half of the year. Unless two people are married and file a joint tax return, only one person may request reimbursement of expenses incurred with respect to a particular child, even where the child satisfies the definition of "child" as to more than one person. Special rules apply to determine which person may receive the reimbursements where more than one person wants to receive reimbursement for expenses incurred with respect to a particular child. Special Tie-breaker Rules. In general, the parent who has custody for the longest period during the calendar year (i.e., the "custodial" parent) is entitled to receive reimbursement for Dependent Care Expenses. This is true even though the non- custodial parent may be allowed to receive the child tax credit and the dependency exemption for the child on their federal income tax return. However, if the custodial parent does not claim the child as a qualifying child for any purpose (i.e., a dependent care expense reimbursement program, the earned income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the non-custodial parent may receive reimbursement for Dependent Care Expenses under a dependent care expense reimbursement program. If one person is the child's parent and the other is not, the child is the Qualifying Individual of the parent and the parent may receive reimbursement for the child's Dependent Care Expenses. If neither person is the child's parent, the person with the highest adjusted gross income for the year in question may receive reimbursement for Dependent Care Expenses. However, in both cases, if the person otherwise entitled to claim the child as a Qualifying Individual does not claim the child as a qualifying child for any purpose (i.e., a dependent care expense reimbursement program, the earned income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the other person may do so and receive reimbursement for dependent care expenses under the DC Plan. It is assumed that all participants in the DC Plan will be entitled to treat the child as a Qualifying Individual for purposes of reimbursement under the DC Plan. ©2007 Hitesman & Assaiates, P.A. 28 Elk River Municipal Utilities 122707 Flexible Benefits Plan