Tax Experts: A Question About Pre-Tax Deductions for Medical Flex Funds

[BethR]

I was finally sitting down to do our taxes using Tax Cut. The software is not the problem. What I am wondering is this.

We have a Medical Flex Fund that amounted to $1800 last year. And our medical insurance premiums which are pre-tax deductions from our payroll amount to about $1300. Should that not decrease the amount in Box 1 on our W-2 by $3100 since $3100 of our salary is not taxed? Or don't I understand this correctly?

And shouldn't our Pennsylvania taxable amount be $3100 more than our federal taxable amount since PA taxes all wages? There are no deductions for medical in this state.

As it is now, our Box 1 (Wages, tips, compensation) is only about $42 more than the amount in Box 15 - State wages, tips, etc.

I am sure that there must be something that I don't understand about this. Is there anyone who could explain it to me?

BTW - the amount in Box 1 is equal to DH's rate of pay times 12 (the yearly amount) - so pre-tax deductions have not already been deducted from that.

I'm so confused.

 

[BethR]

 

[ByTheSea]

Is your Federal Taxable amount reduced by the pre-tax amount? I don't have a W-2 in front of me but isn't Box 1 your wages, and Box 10 your Federal Taxable?

You should report what is reported on each box of your W-2, if you think the information on your W-2 is incorrect you should contact your employer and see if they can review the W-2 with you.

Is it possible that you signed up for pre-tax spending but the deductions never occured? Or they were taken after-tax in error? Or perhaps there is an error on the W-2. Not unheard of but what you received on your W-2 is what was reported to the Government for you, so you do NOT want to make your own reductions, your first step is contact the employer who issued the W-2.

 

[BethR]

BytheSea,

I do believe that a call to my DH's HR is in order. If only to explain this to me.
I know for sure that the deductions were taken - it is on each pay stub. And we have already taken out all of the money from the Medical Flax Fund.
But what I AM wondering if it was ever taken out Pre-Tax as it was supposed to.

All of the boxes on the W-2 lists the same amount - Wages, Taxes and Other Compensation (Box 1), Social Security (Box 3), and Medicare (Box 5). And Box 16 lists the state Wages, etc and it is only $42 less. To me, Box 1 should be $3100 less than the other boxes.

But I could very well be wrong. I am sure that it is just something that I don't understand.

 

[janette]

Ours do have Box 1 showing less than the other boxes. The amount should be be after all pre-tax deductions. Medical insurance, 401K and flexible spending accounts (medical & dependant) . Sounds like something is wrong.

 

[shoes99]

Does he have other taxable benefits like group term life insurance, deferred compensation, portions of these benefits may be taxable and included in box 1. Look in box 10, 11 and 12 for other taxable benefits.

 

[disneefamily]

Disnee Dad Says.........................................My flex account was taken out pre tax. It doesn't even show up as earning that need to be reduced, as a 401k will make box 3 bigger than box 1. It's like I never made it! Doesn't mean my company did it right, last year I had to argue with them because they didn't list CASDI on my w-2. I went to HR, they made a call and was told it was ok. I knew it wasn't and told him to try someone higher up, who also said it was ok! By the fourth call he was talking to like the assistant chief financial officer, who had lived in California and knew what I was talking about.
So when you talk to HR, don't assume they know everything!

 

[BethR]

Hi shoes99!

There is only $42.72 in box 12a - the exact difference between the federal and state wages.

Disnee Dad, I hope that someone knows something. This is a large company - 1,000s of people, they would be issuing a lot of W-2s. And I am sure that most have a Flex fund for Medical and/or Childcare. I am sure that there cannot be that many big mistakes. But who knows?

I checked last year's W-2 and it is the same way.

Must be something that I don't understand...