On Monday, October 26, the IRS released Rev. Proc. 2020-45 updating certain limits for 2021:
For 2021, the dollar limitation employee salary reductions for contributions to health flexible spending arrangements is $2,750 (which is unchanged from 2020). The carryover limit is $550.
For 2021, the monthly limitation for transportation in a commuter highway vehicle and any transit pass is $270 (which is unchanged from 2020). The monthly limitation for qualified parking is $270 (which is unchanged from 2020).
For taxable years beginning in 2021, under § 137(a)(2), the amount that can be excluded from an employee’s gross income for the adoption of a child with special needs is $14,440. For taxable years beginning in 2021, under § 137(b)(1) the maximum amount that can be excluded from an employee’s gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses furnished pursuant to an adoption assistance program for other adoptions by the employee is $14,440. The amount excludable from an employee’s gross income begins to phase out under § 137(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $216,660 and is completely phased out for taxpayers with modified adjusted gross income of $256,660 or more.
Remains unchanged at $5000.
Qualified Small Employer Health Reimbursement Arrangement:
(Small employers—generally those with less than 50 employees that don’t offer a group health plan) For 2021, to qualify as a qualified small employer health reimbursement arrangement under § 9831(d), the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $5,300 ($10,700 for family coverage).
This document is provided for general information purposes only and should not be considered legal or tax advice or legal or tax opinion on any specific facts or circumstances. Readers are urged to consult their legal counsel and tax advisor concerning any legal or tax questions that may arise.
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