What does DeCAP stand for?

The new proposed regulations outline the general requirements for providing dependent care assistance programs and adoption assistance.

Employers offering dependent care assistance programs or flexible spending accounts should review new, more generous proposed rules from the IRS, which would apply to taxable years ending after they are finalized.

A tax expenditure provision can provide relief in any of the following ways: * Special exclusions, exemptions, and deductions, which reduce taxable income and result in a smaller tax liability--for example, tax exempt municipal bond interest or the exclusion from taxable income of employee discounts or dependent care assistance programs.

For the first time, the IRS addresses dependent care assistance programs (DCAPs) and dependent flexible spending arrangements (dependent care FSAs).

You can select reimbursement for group life insurance payments; health care reimbursement; accident, health care plan, or disability plan premiums; or dependent care assistance programs.

Benefits which may be offered by a cafeteria plan are: Type of Benefit Code Section Group term life insurance 79 Health and accident plans 105-106 Qualified group legal services plans 120 Dependent care assistance programs 129 Salary deferral arrangements 401(k) Paid vacation days Reg.

Internal Revenue Service (IRS) recently released proposed regulations that affect the benefits that employer-sponsored Dependent Care Assistance Programs (DCAPs) can provide and the types of expenses that Dependent Care Flexible Spending Arrangements (FSAs) can reimburse.

Other changes made for the child and dependent care credit beginning January 1, 1989, include the reduction of the required age of qualifying dependents from under 15 to under the age of 13 and the requirement of a dollar for dollar reduction of the child and dependent care expenses limit for amounts reimbursed by the employer under a qualified dependent care assistance program and excluded from the taxpayer's gross income.