Dependant Care FSA

**abner80** · 09-10-2009, 08:12 AM

What does dave say about the FSA and has anyone used to Dependant care fsa to save tax dollars? If so how did you estimate how much you would use for the next year? Did you max out the limit for the year or what? You use or lose right!

**Greebo** · 09-10-2009, 08:51 AM

I know it's come up on occasion, but not very often, and so I cannot remember his thoughts on FSA vs. HRA vs. HSA.

**CouponShelle** · 09-10-2009, 09:06 AM

I use flex spending to cover both daycare and insurance copays, etc. I have 2 separate accounts thru work, both max out at $5,000.

For daycare, it will cost us over $5K for the year so I put the max in. For insurance, I guesstimated based on previous years usage. For example, I know that we go to the chiro 1X a month (both me and hubby) so I added up what that usually costs. Then I added in an estimate for contacts for me. I added in well baby visit copays and then padded it a bit for unexpected visits. I added in a few hundred for visits to the naturopath too. Don't forget, you can use this money to buy over the counter meds and stuff as well such as aspirin, bandaids, OTC allergy meds, etc.

If I find I have a large amount left at the end of the year, I go shopping at CVS. Although, I"m usually pretty close or use it all up right at the end of the year.

We have an infant (7 months) in the house this year so with daycare and medical, it reduces my paychecks by approx $300 a month. This is the first year I'll have such a large amount taken out pretax (usually its around $1500, this year it will be closer to $7K). I did "up" my withholdings so they take out less in taxes to counter balance it a bit and so I don't give the government a tax free loan.

I really like having it, I would hate to try to budget for all the visits to the ped and the chiro. Especially since each visit isn't a set price.

**savvy_sniper** · 09-10-2009, 09:21 AM

From my FSA:

# What is the main advantage of enrolling in an FSA?
# The main advantage of an FSA is that you do not pay federal income taxes or social security taxes on the amount you elect to contribute to your FSA. In most states, you don’t pay state taxes on your contribution either. By participating in an FSA, you lower your taxable income and therefore decrease the amount of taxes you pay.

I would THINK Dave would say FSA for dependent care and medical are good.

**Greebo** · 09-10-2009, 09:25 AM

Originally Posted by savvy_sniper

From my FSA:

# What is the main advantage of enrolling in an FSA?
# The main advantage of an FSA is that you do not pay federal income taxes or social security taxes on the amount you elect to contribute to your FSA. In most states, you don’t pay state taxes on your contribution either. By participating in an FSA, you lower your taxable income and therefore decrease the amount of taxes you pay.

I would THINK Dave would say FSA for dependent care and medical are good.

I agree, although there is better out there.

Flex's problem is if you don't use it you lose it.

With an HSA, the money is still pre-tax, but you don't lose it at the end of the year.

**savvy_sniper** · 09-10-2009, 09:50 AM

We use all of ours every year and have never lost it. It just takes a little planning and forethought. It isn't meant to reimburse you for emergency room visits, broken bones, etc. I would think Dependent care is VERY predictable.

I see the doctor regularly ($20 copay) and I have three prescriptions (filled 4X a year). I am having much needed dental work. Dentist does most needed work and as much as dental insurance will cover and I can afford the copays. When that runs out, we stop, and start again the next year. I go to the eye doctor every year and get new glasses every other year. I add a couple of extra $100 for OTC stuff and if there is any money left in the FSA at the end of the period, I use it up on antifungal foot cream, insoles, cough drops, bandaids, ibuprofen, etc. I have a VERY nice first aid kit that has been built up over the last three years.

# How does an FSA work?
# To begin, you decide if you want to participate in a healthcare and/or dependent day care account depending on your employer offerings. Then, you would:

* Estimate the amount you will spend on out-of-pocket health care expenses and/or dependent care expenses during the plan year.
* Decide how much you wish to set aside into your Healthcare account and/or your Dependent Day Care account. (Be conservative, review your prior year’s expenses and plan only for predictable costs)

**Greebo** · 09-10-2009, 10:03 AM

Yes, but if you DON'T use it, you lose it. If you know with certainty that you'll have fixed expenses up to the max, then great. If not, the HSA can be a better option cause the account is good for life - money in stays in till needed, forever. (And can also grow over time)

**CouponShelle** · 09-10-2009, 10:33 AM

Greebo~
Help me out... how is a HSA pre-tax? Are these usually offered thru employers? I know my husband had a HSA because he's self employed but all that $$ was post tax. I'd be interested in learning more (hmm, off to google I suppose, LOL)
Shelle

**Greebo** · 09-10-2009, 11:06 AM

Originally Posted by CouponShelle

Greebo~
Help me out... how is a HSA pre-tax? Are these usually offered thru employers? I know my husband had a HSA because he's self employed but all that $$ was post tax. I'd be interested in learning more (hmm, off to google I suppose, LOL)
Shelle

It's through the employer, and IIRC it's a pre-tax deduction but I can't check my paystub this minute to check because I've pulled a total brainfart on my password for the paycheck site. :/

But with self employed, you are itemizing, right? So your medical expenses - I THINK including HSA contributions - are deductible - which would turn them into pre-tax money, just at tax time.

**CouponShelle** · 09-10-2009, 01:41 PM

Ah ok, my employer does not offer it, we only have the one option so that's what I chose. And you're right, its use it or lose it but so far I haven't had any trouble spending it, LOL. I've used it thru various employers for the past 6 or 7 years. I'm interested to see how it affects my taxes having that $7K come off the top of my income.

**Greebo** · 09-10-2009, 01:45 PM

Coupon - if your HSA or FSA is through an employer then it almost certainly should be pre-tax, which means it'll reduce your taxable income, lowering your overall taxes.

**CouponShelle** · 09-10-2009, 02:13 PM

Yes, they are pre tax which I'm excited about. I'm excited to see if I calculated right so we don't get a refund (or much of one) and or don't owe a whole lot in taxes (although I'm putting a bit away, just in case).

**abner80** · 09-10-2009, 04:25 PM

Does the Dependant Care FSA cover babysitters too. Good info thnks all

**joyofsix** · 09-10-2009, 04:56 PM

FSA dependent care is only if they have a tax ID ##. That sort of leaves out your next door teen, KWIM? We used it when I worked. We just figured out the cost from last year and deducted that. We do health FSA too. It could be tricky if you don't have kids, if you do I can just about guarantee you'll use it.