Another FSA question

[JeffreyY]

Ok, I finally did a HCFSA and I thought there would be a slight tax break but my federal tax was actually .05 higher then before. They are taking $31 out of each pay check but the taxes were the same , I thought it would be about $8 less. I'm disappointed because there is a $48 fee to do the FSA so if I'm not saving anything on the taxes and it is costing me $48 to do the FSA. I could have just put $31 into a sinking fund and ended up ahead.

So my question, does anyone know why I am not getting the tax break I thought I would get?

Thanks.

 

[Soben]

That's because the Making Work Pay tax credit that was in effect last year on the federal income taxes went away. So you're taxes are lower than the amount they would have increased. You're still ahead.

 

[swilshire]

Our company doesn't charge a fee, but one of the nicest things is that they will reimburse you before you've deposited the money. For example, I deposit $50 per check into the fund, but I could spend $300 on January 1 and get reimbursed right away.

I'm pretty conservative because I don't want to lose any money, and it's going to be harder now that OTC drugs are not paid by the FSA, but we still usually go through our $1300 by June or so.

Sheila

 

[Soben]

I'm pretty conservative because I don't want to lose any money, and it's going to be harder now that OTC drugs are not paid by the FSA, but we still usually go through our $1300 by June or so.

You can get otc if you have a prescription. That's probably only worth it if you take a couple expensive otc's. DH takes Prilosec and my son takes Zyrtec. I can buy those with my money and send in the receipts with the prescription from the Dr. and get reimbursed. Definitely a PITA compared to whipping out the debit card like last year. But it's worth it to me on those 2.

 

[JeffreyY]

That's because the Making Work Pay tax credit that was in effect last year on the federal income taxes went away. So you're taxes are lower than the amount they would have increased. You're still ahead.

I thought of that, but I wasn't even sure I was getting the Making Work Pay tax credit as when it went into effect I got a pay increase. So now I will not know if I save enough to make it worth the administrative fee and effort to fill out all the paper work involved.

I will be able to put in for more then is currently in the account so I guess that is an advantage.

 

[swilshire]

DH takes Prilosec and my son takes Zyrtec.

Prilosec is the one I always spend a lot on. Maybe it's worth getting a prescription.

Sheila

 

[dreamin_disney]

I have the FSA and was shocked to see my check. everything stays the same each paycheck so i had them take out another $30 per check(twice a month) =total $60 month. Well last year my federal was $6.02 and now its $20.52. I thought taking out another $30 would save me more bumping me up a lil in my paycheck but this time i was paid $28 less. I'm going to call payroll tomorrow and see if it the pay work thing someone mentioned...is it the Obama tax break???

oh and my fica was 44.86 and now its 29.13

 

[bellarella]

I thought of that, but I wasn't even sure I was getting the Making Work Pay tax credit as when it went into effect I got a pay increase. So now I will not know if I save enough to make it worth the administrative fee and effort to fill out all the paper work involved.

I will be able to put in for more then is currently in the account so I guess that is an advantage.

You can figure it out just by doing the math.

Find out your marginal tax rate (the highest percentage you pay in taxes) and multiply it by the amount you set up for your FSA. If it's greater than the $48 fee, then you know about the fee part (not the effort though!). The 2011 tables are here: http://www.irs.gov/irb/2011-02_IRB/ar16.html

For example: If you are putting in $800 for the year and you make $30,000, then you are in the 15% tax bracket. Since your FSA contributions are "last dollars" they would be taxed at the full 15%, so your tax savings by contributing would be $800 X .15, or $120, well above the $48 fee.

 

[JeffreyY]

Find out your marginal tax rate (the highest percentage you pay in taxes) and multiply it by the amount you set up for your FSA. If it's greater than the $48 fee, then you know about the fee part (not the effort though!). The 2011 tables are here: http://www.irs.gov/irb/2011-02_IRB/ar16.html

For example: If you are putting in $800 for the year and you make $30,000, then you are in the 15% tax bracket. Since your FSA contributions are "last dollars" they would be taxed at the full 15%, so your tax savings by contributing would be $800 X .15, or $120, well above the $48 fee.

Thanks this was very helpful. I was able to figure out that I am saving about $135 after the fee. I'm not sure if it will be worth all the paper work involved. I guess I will see how this year goes.

 

[kelcoppens]

wow. I had NO idea there is usually a fee to do FSA. I do it through my company. I guess my company pays the fee themselves. Im always learning something new on this board!

 

[kelcoppens]

Our company doesn't charge a fee, but one of the nicest things is that they will reimburse you before you've deposited the money. For example, I deposit $50 per check into the fund, but I could spend $300 on January 1 and get reimbursed right away.

Our company does this too. We have a debit card that has the full amount for the year on there. So I can use as much as I need to at any time and I dont have to wait to get reimbursed because I just use the FSA debit card!

 

[aprilgail2]

wow. I had NO idea there is usually a fee to do FSA. I do it through my company. I guess my company pays the fee themselves. Im always learning something new on this board!

I've never heard of a fee to do FSA! I have been using a FSA for many years and never had to pay any type of fee

 

[jedijohn]

I've never heard of a fee to do FSA! I have been using a FSA for many years and never had to pay any type of fee

I never heard of a company charging a fee for an FSA either; sounds like a crappy company. Usually the FSA is really easy to use...we either use a debit card that is linked to the account or we can fill out a short online form and scan in the receipt.

 

[rangermom]

We have 2 FSA accounts. One for health care and the other for dependent care. We don't have a fee for either one of them. What I like about the health care one is that we allotted $2500 for the year to be taken out of our 26 pay checks over the year. DS is having botox injected in his legs in a couple of weeks after insurance it is a $500 procedure and since it is the new year we have to do our $350 deductible plus the $500. Since we get to use the $2500 at the beginning of the year even though we have not paid the entire amount yet. It is also billed directly through our insurance so we do not have to file any paperwork.

DS has to have this procedure every 3 months so now I wish I had allotted more.