>The Working Families Tax Relief Act of 2004 contains tax cuts totaling $146 billion, according to the Associated Press. Its major provisions apply to individual taxpayers through the expansion of certain deductions and tax brackets.
>The bill, passed by Congress last month, extends numerous provisions previously in the tax code, including the extension of the child tax-credit of $1,000 for another five years, the AP reports. It also extends the amount of people in the 10% tax bracket for six years, as well as allows continuing relief from the ‘marriage penalty’ for four more years.
>The bill’s influence on employee benefits manifests itself in multiple ways, including:
- extending Archer medical savings accounts for employees in small companies through the end of 2005.
- establishing a uniform definition of a child across various tax code provisions, which affects the adoption assistance benefit and dependent care credit, starting in 2005.
- extending the mental health parity provisions of the Employee Retirement Income Security Act (ERISA) so that group health plans must have the same limit to mental health benefits as they do for medical health benefits.
- providing technical corrections to Section 211 of the Taxpayer Relief Act of 1997. This correction would require that the gift tax would apply to a change in beneficiary of qualified tuition programs, unless then beneficiary is in the same or a higher generation and is a member of the family.
- providing technical corrections to Section 405(c) of the Job Creation and Workers Assistance Act of 2002 (JCWAA). The bill confirms previous changes to reporting requirements for underfunded plans.
- providing technical corrections to both Sections 611 and 637 of the Economic Growth and Tax Relief Reconciliation Act of 2002 (EGTRRA). The correction to Section 611, which offered a new rounding rule for benefits and contributions under the tax code’s Section 415, requires that a pre-existing rounding rule applies to certain tax code provisions and is the default rounding rule for Section 415. With Section 637, the technical correction revises the definition of compensation for the determination of SIMPLE plan contributions, which now includes wages paid to domestic workers.
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