26 USC 129 - Dependent care assistance programs

U.S Code last checked for updates: Nov 22, 2024

§ 129.

Dependent care assistance programs

(a)

Exclusion

(1)

In general

(2)

Limitation of exclusion

(A)

In general

(B)

Year of inclusion

(C)

Marital status

(D)

Special rule for 2021

(b)

Earned income limitation

(1)

In general

The amount excluded from the income of an employee under subsection (a) for any taxable year shall not exceed—

(A)

in the case of an employee who is not married at the close of such taxable year, the earned income of such employee for such taxable year, or

(B)

in the case of an employee who is married at the close of such taxable year, the lesser of—

(i)

the earned income of such employee for such taxable year, or

(ii)

the earned income of the spouse of such employee for such taxable year.

(2)

Special rule for certain spouses

(c)

Payments to related individuals

No amount paid or incurred during the taxable year of an employee by an employer in providing dependent care assistance to such employee shall be excluded under subsection (a) if such amount was paid or incurred to an individual—

(1)

with respect to whom, for such taxable year, a deduction is allowable under section 151(c) (relating to personal exemptions for dependents) to such employee or the spouse of such employee, or

(2)

who is a child of such employee (within the meaning of section 152(f)(1)) under the age of 19 at the close of such taxable year.

(d)

Dependent care assistance program

(1)

In general

(2)

Discrimination

(3)

Eligibility

(4)

Principal shareholders or owners

(5)

No funding required

(6)

Notification of eligible employees

(7)

Statement of expenses

(8)

Benefits

(A)

In general

(B)

Salary reduction agreements

(9)

Excluded employees

For purposes of paragraphs (3) and (8), there shall be excluded from consideration—

(A)

subject to rules similar to the rules of section 410(b)(4), employees who have not attained the age of 21 and completed 1 year of service (as defined in section 410(a)(3)), and

(B)

employees not included in a dependent care assistance program who are included in a unit of employees covered by an agreement which the Secretary finds to be a collective bargaining agreement between employee representatives and 1 or more employees, if there is evidence that dependent care benefits were the subject of good faith bargaining between such employee representatives and such employer or employers.

(e)

Definitions and special rules

For purposes of this section—

(1)

Dependent care assistance

(2)

Earned income

(3)

Employee

(4)

Employer

(5)

Attribution rules

(A)

Ownership of stock

(B)

Interest in unincorporated trade or business

(6)

Utilization test not applicable

(7)

Disallowance of excluded amounts as credit or deduction

(8)

Treatment of onsite facilities

In the case of an onsite facility maintained by an employer, except to the extent provided in regulations, the amount of dependent care assistance provided to an employee excluded with respect to any dependent shall be based on—

(A)

utilization of the facility by a dependent of the employee, and

(B)

the value of the services provided with respect to such dependent.

(9)

Identifying information required with respect to service provider

No amount paid or incurred by an employer for dependent care assistance provided to an employee shall be excluded from the gross income of such employee unless—

(A)

the name, address, and taxpayer identification number of the person performing the services are included on the return to which the exclusion relates, or

(B)

if such person is an organization described in section 501(c)(3) and exempt from tax under section 501(a), the name and address of such person are included on the return to which the exclusion relates.

In the case of a failure to provide the information required under the preceding sentence, the preceding sentence shall not apply if it is shown that the taxpayer exercised due diligence in attempting to provide the information so required.

(Added Pub. L. 97–34, title I, § 124(e)(1), Aug. 13, 1981, 95 Stat. 198; amended Pub. L. 97–448, title I, § 101(e), Jan. 12, 1983, 96 Stat. 2366; Pub. L. 98–369, div. A, title IV, § 474(r)(6), July 18, 1984, 98 Stat. 839; Pub. L. 99–514, title I, § 104(b)(1), title XI, §§ 1114(b)(4), 1151(c)(5), (f), (g)(4), 1163(a), (b), Oct. 22, 1986, 100 Stat. 2104, 2450, 2503, 2506, 2507, 2510; Pub. L. 100–485, title VII, § 703(c)(2), Oct. 13, 1988, 102 Stat. 2427; Pub. L. 100–647, title I, § 1011B(a)(14), (15), (18), (30), (31)(A), (c)(1), (2)(A), title III, § 3021(a)(14), Nov. 10, 1988, 102 Stat. 3485, 3487–3489, 3631; Pub. L. 101–140, title II, §§ 203(a)(1), (2), 204(a)(1)–(3)(C), Nov. 8, 1989, 103 Stat. 830, 832; Pub. L. 101–239, title VII, § 7811(h)(2), Dec. 19, 1989, 103 Stat. 2409; Pub. L. 104–188, title I, § 1431(c)(1)(B), Aug. 20, 1996, 110 Stat. 1803; Pub. L. 108–311, title II, § 207(12), Oct. 4, 2004, 118 Stat. 1177; Pub. L. 117–2, title IX, § 9632(a), Mar. 11, 2021, 135 Stat. 160.)

cite as: 26 USC 129