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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 

 

Established in 1996, The Wagner Law Group has 22 attorneys engaged exclusively in employee benefits, estate planning and employment law. Five of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.

 

 

Contact Info

The Wagner Law Group

 

  Integrity | Excellence

  

Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110


Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7121 Fairway Drive
Suite 203
Palm Beach Gardens, FL 33418

   

San Francisco Office

Tel: (415) 625-0002

Fax: (415) 829-4385

315 Montgomery Street

Suite 902

San Francisco, CA 94104

 

www.wagnerlawgroup.com

 

 

January 24, 2013 

 State and Federal Law Alert

 

Fiscal Cliff Legislation Impacts Employer-Provided Fringe Benefits 

 

Earlier this month, President Obama signed into law the American Taxpayer Relief Act of 2012 ("ATRA"). ATRA was enacted to address the combination of tax increases and automatic spending cuts (widely known as the "fiscal cliff") that were set to take effect in 2013. Several provisions of ATRA make important changes that impact employer-provided fringe benefits. These changes are highlighted below:

 

Qualified Transportation Benefits. Before January 1, 2012, a parity rule for mass transit benefits (and van pool benefits) made the monthly exclusion limit equal to the limit for the qualified parking benefits exclusion. On January 1, 2012, the parity rule expired and the monthly mass transit/van pool limit fell to $125, while parking benefit limits remained at $240. ATRA restores the parity rule for 2013, and the limits for parking benefits and mass transit/van pool benefits will both be $245 per month.

 

ATRA also retroactively increases the 2012 mass transit/van pool benefit exclusion to $240. As a result of this retroactive increase, monthly transit benefits provided to employees in 2012 in amounts between $125 and $240 are now excludable from taxable income. Employers are now required to correct any excess FICA withholding that resulted and amend affected employees' 2012 Forms W-2 to correct federal taxable income amounts. The IRS recently issued Notice 2013-8 to help employers comply with and implement the retroactive increase.

 

Qualified Adoption Assistance Benefits. The income exclusion for employer-provided adoption assistance benefits was set to expire at the end of 2012. ATRA permanently restores the exclusion for qualified adoption assistance benefits. For 2013, the maximum adoption assistance benefit is $12,970 (a $320 increase over the 2012 maximum).

 

Qualified Educational Assistance Programs. The income exclusion for benefits provided under a qualified education assistance program was also set to expire at the end of 2012 because of a sunset provision. ATRA strikes the sunset provision and indefinitely extends the income exclusion for qualified educational assistance benefits. For 2013, the maximum amount of qualified educational assistance benefits that may be excluded remains at $5,250.

 

Dependent Care Assistance Plans ("DCAP"). For 2013, the overall DCAP exclusion limit for married employees remains at the lesser of $5,000 or the lower of the employee's or the spouse's earned income. If an employee's spouse is either a student or incapable of self-care, the spouse is deemed to have a certain specified monthly income for DCAP purposes. For 2013, these deemed amounts will remain at the 2012 levels (e.g., $250 per month for one child and $500 per month for two or more children). Before ATRA's enactment, deemed income amounts were scheduled to decrease to $200 and $400, respectively.

 

IRS Releases Revised Guidance on Deductibility of Medical and Dependent Care Expenses

 

The IRS has released the 2012 editions of Publication 502, "Medical and Dental Expenses" and Publication 503, "Child and Dependent Care Expenses." Pub. 502 provides guidance on which medical expenses are deductible under Internal Revenue Code Section 213, and identifies medical expenses that may be reimbursed or paid by health flexible spending accounts, health savings accounts, or health reimbursement accounts.

 

Pub. 503 outlines the requirements that taxpayers must satisfy to claim the dependent care tax credit available under Code Section 21. Many of these requirements also apply to dependent care flexible spending accounts.

 

Updates to 2012 Publications. While the 2012 Publications are substantially similar to their 2011 counterparts, relevant dollar amounts have been revised to reflect their 2012 inflation adjusted values. In addition, the 2012 version of Pub. 502 provides taxpayers with the following new guidance:

  • an explanation of the lodging expense rules as applied to individuals travelling with the person receiving medical care, and
  • an updated explanation of the health coverage tax credit. 

The 2012 edition of Pub. 503 has been revised to include an example demonstrating how an employee with two children can exclude $5,000 in dependent care assistance plan reimbursements and also take a partial dependent care tax credit based on $1,000 in additional dependent care expenses.

 

 

This Newsletter is protected by copyright. Material appearing herein may be reproduced with appropriate credit.

  

Pursuant to Internal Revenue Service Circular 230, we hereby inform you that any advice set forth herein with respect to US federal tax issues is not intended or written by The Wagner Law Group to be used and cannot be used, by you or any taxpayer, for the purpose of avoiding penalties that may be imposed on you or any other person under the Internal Revenue Code.

 

This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.