Dependent Care Flexible Spending Accounts for Your Business
Sarah B
Employers seeking to offer family-friendly benefits may want to consider flexible spending accounts (FSAs) for dependent care. These FSAs let employees make pre-tax contributions through payroll withholding to help cover eligible expenses. Because of the major tax bill enacted on July 4, 2025, the annual contribution limit, currently $5,000, will rise to $7,500 in 2026.
FSA contributions reduce employees’ income tax and payroll tax and employers’ payroll tax. Withdrawals used to pay qualified expenses are tax-free.
These include expenses for care for a child under age 13 or another dependent unable to care for themselves due to physical or mental limitations. Contact the office with questions.
Our regularly updated newsletter provides timely articles to help you achieve your financial goals. Please come back and visit often. Feature Articles How Does the New Tax Deduction for Car Loan Interest Work? NOL Deductions Can Ease the Pain of Business Losses The Tax Implications of Remote Work Tax Tips Simplify Expense Reporting With High-Low Travel Per Diem Rates Last-Minute Tax Strategy: Accelerating Deductions What Are the Tax Consequences of Employee Gifts?
December 15 Calendar-year corporations: Pay the fourth installment of 2025 estimated income taxes, completing Form 1120-W for the corporation’s records. Employers: Deposit Social Security, Medicare and withheld income taxes for November if the monthly deposit rule applies. Employers: Deposit nonpayroll withheld income tax for November if the monthly deposit rule applies. January 12 Individuals: Report December 2025 tip income of $20 or more to employers (Form 4070).
The holidays are a time for gratitude, and many employers show appreciation by giving gifts to their staff. Different types of gifts can have different tax consequences. So whether it’s a gift card, a holiday turkey or a year-end bonus, it’s important to know how the IRS will treat the gift. “Achievement awards” are deductible by the employer and tax-free to the employee if certain rules are met, including that the gift be of tangible personal property. So are “de minimis” gifts, such as that holiday turkey. But year-end bonuses are taxable. Contact the office if you have questions about the tax implications of employee gifts.