Flexible Spending for Daycare

Does anyone have pros/cons of this? My husband is looking into doing it and I am wondering how much $$ is saved with it. He wants to do the $5,000 max, but it's $416 out of his paycheck (he gets paid once per month).

I understand we get the $ back, but do you get it back quickly? I'd hate to have $416 less, then pay $1590 for the daycare for the month and be waiting for the check to come in, if this makes any sense.

Thanks for any input

Re: Flexible Spending for Daycare

this calculator should help you figure it out.FSA Calculator

Re: Flexible Spending for Daycare

You can sign up for direct deposit if you really want the money to come quickly. It takes about a week to arrive once you submit the forms.

Re: Flexible Spending for Daycare

the administrator that your husbands co is using for the FSA will determine how often the funds are reimbursed.

The way I have mine set up, is that I have already submitted the reimbursement request, I get paid bi-weekly, so 192.30 each pay period comes out of my check ($5000.00 annually) Because I have previously made the reimbursement request, I receive the reimbursement usually the same day that I am paid....so I never really am waiting or out of the money.

if you DH is contributing to an FSA, then his annual take home pay will actually increase...the reason is that the payroll deduction is pretax...so you are using pre-tax money to pay for day care expenses that you are going to incure one way or another.

the current law states that the maxium amount that a family can contribute to dependant care FSA is $5000.00...otherwise I would contribute more myself. Daycare reimbursement can only be deposited back to you, once the contribution has actually been made. If you are also considering Healthcare, the law differs. If your annual healthcare contribution is $1000.00...then $1000.00 is available to you to use from the day the plan year starts.

with both Healthcare and dependent Care FSA, it is an annual contribution amount that is choosed...and can only be adjusted if you have some sort of life event, such as Death, Birth or Adopation, Divorce or Marriage.

if you have any other questions on FSA pleases feel free to FM me....this is one of the features that I sell for my company and I am pretty well versed in the area.

Re: Flexible Spending for Daycare

Re: Flexible Spending for Daycare

We did it last year, but know that your tax credit for childcare is limited if you do. I would take the time to figure out which benefits you more from a tax perspective. You do not get both.

I'd have to ask DH but I think the tax credit would have been more beneficial for us than doing the FSA.

Message edited 10/6/2009 1:39:16 PM.

Re: Flexible Spending for Daycare

Thank you ladies, for all your help! It looks like this might be worth it!

Re: Flexible Spending for Daycare

Re: Flexible Spending for Daycare

Message edited 10/6/2009 2:27:43 PM.

Re: Flexible Spending for Daycare

Regarding the childcare deduction/credit on your taxes, bear in mind that at certain income limits your child care expenses get phased out. I don't have the income amount right in front of me. But I know for DH and I we don't get the benefit of that deduction so the FSA plan allows us to at least get a tax break on $5k of the cost. I wish it was more.

Re: Flexible Spending for Daycare

It works great for us

We just set up the direct deposit so it will take effect next time. DH put in the request on Friday and we will have our check tomorrow in the mail, so its quick

Plus DH doesnt have to put much in - his company put in 50 cents for every dollar he puts in, so we put in about 3500 or so and DH's company puts in the other 1500 so its way worth it for us!!

Re: Flexible Spending for Daycare

Re: Flexible Spending for Daycare

I found a worksheet that compared using an FSA vs. the tax credit and it still works out to be better for us to use an FSA.

www.fsafeds.com/forms/dcfsa_worksheet.pdf

Re: Flexible Spending for Daycare

Re: Flexible Spending for Daycare

Posted by CkGm

Posted by lbelle821

Regarding the childcare deduction/credit on your taxes, bear in mind that at certain income limits your child care expenses get phased out. I don't have the income amount right in front of me. But I know for DH and I we don't get the benefit of that deduction so the FSA plan allows us to at least get a tax break on $5k of the cost. I wish it was more.

ITA- If we didn't get the FSA, we would get NO breaks on child care from the govt.

Plus that $5000 can really help you in terms of qualifying for other credits, such as stimulus that phase out at certain income levels since it reduces your overall taxable income.

Re: Flexible Spending for Daycare

Re: Flexible Spending for Daycare

I love this plan

Mine comes out each check at $208.33 and then comes back to me in a check.

To me, its like getting paid taxes on AJ's daycare. Since is pretax im not paying the tax so that's going back to my bottom line. Since its daycare I would have spent the money anyway.

My only problem is i blew through the $5000 by May and im still getting checks since its paid as the money is given. So they only pay me what I've paid into the account.

It worked out great for us since we relocated, two months I had no daycare but my hubby wasnt working so that helped.

Then when he was working and she was in Daycare it was cheaper (texas) so my monthly daycare is now only about $800 of which i get $400 from work tax free. HUGE help!

Message edited 10/6/2009 6:09:20 PM.