Transit Plan and Dependent Care Legislation Updates

Congress approved a one year extension through 12/31/2011 of the pre-tax mass transit benefit cap of $230 per month. Without the extension, the monthly maximum contribution would be reduced to the prior limit of $120.

The legislation also extends prior expiring changes to the dependent care tax credit, which has the following impact on dependent care benefits:

  • Extends the increased tax credit amount for dependent child care expenses under Section 21 (remains $3000/6000 in lieu of $2400/4800)
  • Extends the higher assumed earnings amount for an incapacitated or full-time student spouse (remains $250/500 in lieu of $200/400).

In Notice 2010-94, the IRS delayed the effective date for the transit plan debit card ruling (Revenue Ruling 2006-57) until January 1, 2012: The delay is to provide transit systems more time to adapt their technology for compatibility with the requirements for vouchers

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