Payroll for NA / Time and Labor - PSFT (MOSC)

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Pennsylvania Dependent Care Assistance

edited Mar 1, 2024 8:30PM in Payroll for NA / Time and Labor - PSFT (MOSC) 5 commentsAnswered

Greetings everyone,

In December, Pennsylvania enacted legislation known as the Dependent Care Assistance Act (pa.gov), which allows for employee contributions to Dependent Care Assistance Programs (DCAP) to be excluded from taxable wages for Pennsylvania state taxes. Given the timing of this legislative change, it's likely that employers have been withholding taxes on such assistance throughout the 2023 tax year, potentially impacting the W2 forms of employees who received this benefit in 2023.

I'm having difficulty locating information about this in a tax release. Can anyone share insights on how to configure systems to accommodate this change?


More info:



Employers:

  1. If you have already filed your W-2s with the Department of Revenue, file a corrected W-2 with the dependent care benefits (up to $5,000) excluded. Provide an updated W-2 to the employee to alert them of the change.
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