Question

Tasha receives reimbursement from her employer for dependent care expenses for up to $8,000. Tasha applies for and receives reimbursement of $6,000 for her 10 year old son. How much, if any, is includible in her income?

A. $0.
B. $1,000.
C. $3,000.
D. $6,000.

Answer 1

If Tasha receives reimbursement for dependent care expenses from her employer, it is considered a fringe benefit and if the amount exceeds the maximum exclusion, it is includible in her income.

Step-by-step explanation:

If Tasha receives reimbursement for dependent care expenses from her employer, it is considered a fringe benefit and may be taxable. However, if Tasha's employer has a dependent care assistance program that meets certain requirements set by the IRS, up to $5,000 of the reimbursement can be excluded from her income.

In this case, Tasha receives $6,000 in reimbursement for her 10-year-old son. Since this amount exceeds the maximum of $5,000 that can be excluded, the $1,000 excess is includible in her income.

Therefore, the correct answer is B. $1,000.