FSA payroll deduction

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I may have asked this before but don't remember the answer and can't find it here. The topic may help other users, anyway.

I record my salary as gross and my payroll deductions as excludable special expenditures. For the FSA deductions I record an offsetting tax-neutral special receipt. That allows modeling the tax and social security effects while still keeping the FSA money in my economy.

For the FSA, I deduct the IRS limit. Those limits may be adjusted from time to time but are not indexed. That being the case, should I record them in ESP using current or future dollars?

Thanks

Comments

dan royer's picture

Since it's an amount stipulated by law, I would say enter it as "dollars" not "today's dollars. For next year they allow again the same dollar amount, not some new amount adjusted for inflation. But I will ask Larry just to make sure we get this right.

Thanks. My other payroll deductions being based on the market price of benefits, I used 'today's dollars' for those.

Hi Chris,

I RESPOND IN CAPS. BEST, LARRY

I record my salary as gross and my payroll deductions as excludable special expenditures.

YOU CAN DO IT THIS WAY. OR, AN EASIER WAY, WHICH WE RECOMMEND WHEN YOU CLICK GUIDE, IS TO JUST ENTER YOUR WAGES NET OF TAX EXCLUDABLE DEDUCTIONS.

For the FSA deductions I record an offsetting tax-neutral special receipt. That allows modeling the tax and social security effects while still keeping the FSA money in my economy.

THE CONTRIBUTIONS INTO THE FLEXIBLE SPENDING ACCOUNTS THE SPECIAL SPENDING ACCOUNTS SHOULD BE TREATED AS A TAX EXCLUDABLE SPECIAL EXPENDITURE. THE WITHDRAWALS, INCLUDING ACCUMULATED INTEREST, SHOULD BE MODED AS NON-TAX RELATED SPECIAL RECEIPTS.

For the FSA, I deduct the IRS limit. Those limits may be adjusted from time to time but are not indexed. That being the case, should I record them in ESP using current or future dollars?

I'D KEEP THEM FIXED IN NOMINAL DOLLARS. MY GUESS IS THEY ARE GOING BYE BYE OR AT LEAST WON' T BE INDEXED. THE COUNTRY IS COMPLETELY BROKE.

I prefer to record gross earnings and list excludable payroll deductions explicitly as special expenses. That way I don't have to remember what's in it and what's not. It makes the dollar amounts in ESP more closely match corresponding numbers in Quicken. That allows me to do a reality check against ESP's suggestions by it to the discretionary category in my Quicken budget.

I'll use nominal dollars. I include them only for the next seven years until my wife retires (after I do). If discontinued the effect on my profile won't be significant.

Thanks

FYI. The FSA allowance increased 10% for next year, at least for my employer's plan. The maximum deduction per participant is now $2750. My wife works for HCA and has not been informed of any change. They still limit it to $2,500.

The limit is not per family, but per plan. As is, we're able to deduct a total of $5,000.