Last year (and this year, annoyingly enough), I had $5000 taken out of my paycheck pre-tax. This was supposed to be money that was not taxable so that I could pay for child care. As such, when filling out my 2007 return, I did not include this in taxable income.
Well, it turns out that pre-tax means ‘deferred tax’. The $5000 not only should have been included in my taxable income, but also made me ineligible to get child and dependent care expenses deductions.
My 2007 tax return was audited, and now I owe the government $522 + $22 in interest and penalties.
Thanks for that benefit, Deloitte. I’m glad that not only do I pay most of my income to child care, but I also had to pay an extra $22, as well as jump through hoops to get back my $5000 that was deducted from my income.