Wait the $83,500 limit is per employer?? I thought it was a total annual limit across all accounts? Does that mean if I contribute to a 401k at two different employers in the same year I could potentially contribute up to $167,000 total??

Yes, the $83,500 annual addition limit (for 2024) is technically per-employer. So if you work for two completely unrelated employers who each have their own 401(k) plan, you could potentially contribute up to the limit in each plan. However, your personal elective deferral limit ($23,000 for 2024, or $30,500 if you're over 50) is a combined limit across all employer plans. So while you can't defer more than $23,000 total between both employers' plans, you could still potentially reach the annual addition limit at each employer through employer contributions and after-tax contributions.

This is super helpful. What about if some of my money went to ESPP (employee stock purchase plan)? Does that count toward the $83.5k limit? And also do you know if we can just leave excess contributions in there and pay the penalty? Is it just 6% per year or are there other issues?

That's really helpful! I hadn't thought about breaking it down hourly like that. My daughter is there from 7:30am-5:30pm most days, with regular program hours being 9am-3pm, so that's 4 extra hours daily that are clearly for childcare purposes. Summer is about 8 weeks when she's there full-time. Does this sound like a reasonable approach?

That approach sounds perfect for your situation. With regular program hours of 9am-3pm and your daughter attending 7:30am-5:30pm, you've got 4 hours of extended care each day that clearly qualifies for the credit. For the summer period (8 weeks), you can count all hours as qualified childcare expenses since regular school wouldn't be in session. The IRS recognizes that summer programs serve a dual purpose of education and allowing parents to work, so the full cost during that period typically qualifies regardless of content.

Actually, the Child and Dependent Care Credit maximum was temporarily increased a couple years ago but has reverted back to the lower amounts for 2025 filing. Always check the current year's limits because Congress keeps changing these numbers.

Do you have a template for that written plan? Or did you have your accountant create it? I'm trying to figure out if this is something we can do ourselves or if we need professional help with it.

I created it myself based on some research, then had my accountant review it. It doesn't need to be super complex - mine is about 2 pages. It basically states that the corporation will reimburse employees (including shareholder-employees) for health insurance premiums up to a certain amount annually. Key elements to include: effective date, eligible employees, what expenses are covered, maximum reimbursement amounts, how/when reimbursements will be processed, and documentation requirements (employees need to submit proof of premium payments). You should also state that it's intended to comply with relevant tax regulations.

I did this with my S-corp and it works well, but make sure you understand the income reporting. The marketplace uses MAGI (modified adjusted gross income) to determine subsidies, which includes your W-2 wages plus business profits passed through to your personal return.

Thank you so much for sharing your experience. That makes me feel a lot better. Did you use a tax preparer or did you do it yourself? And about how much were the penalties as a percentage of what you owed?

I used a local tax preparer who advertised help with unfiled returns. Cost me about $175 per year to prepare, but it was worth every penny for the peace of mind. The penalties ended up being roughly 25% of what I owed, plus interest that had accumulated. So for example, one year I owed about $2,200 in actual taxes, and the penalties/interest added about $800. Not fun to pay, but definitely not the financial apocalypse I had built up in my head. The payment plan let me spread it out over 36 months too.

Yes! This tripped me up too. If you're using software like TurboTax or H&R Block, make sure you buy the specific year versions for each past year. Current year software won't work for prior years.

This is a great point that I hadn't considered. We've been together for over 10 years and have the kids together, but you're right that it's always smart to think about all scenarios. Do you know if such an agreement would have any impact on how the IRS views the gift? I want to make sure anything we do on the relationship side doesn't create tax complications.

An agreement about what happens to the gift in different scenarios shouldn't change how the IRS views the gift, as long as the gift is complete and no strings are attached at the time it's made. The key from a tax perspective is that you're not expecting anything in return. However, if the agreement makes the transfer look more like a loan or conditional payment rather than a gift, that could potentially create issues. Make sure any agreement you create clearly states that the transfer is a completed gift for tax purposes, and any terms about future scenarios don't make it conditional in a way that would undermine the gift status.

Recipients generally don't report gifts as income or file any special forms. It's only the giver who has to file Form 709 if the gift exceeds the annual exclusion amount (currently $17,000 per person). The girlfriend would just receive the money tax-free. This is one of the nice things about gifts - the recipient has no tax consequences or reporting requirements.