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Flexible Spending Accounts
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Flexible Spending Accounts
FSAs can help you save money if you accurately estimate your eligible expenses for the coming year.
Use the WageWorks Healthcare FSA calculator or the Dependent Day Care FSA calculator to help you estimate FSA eligible expenses.
Spending accounts allow you to set aside money from your salary before taxes are calculated. You can then use those funds to pay for eligible healthcare or Dependent Day Care expenses incurred by you or your eligible family members. You can set aside up to $5,000 in each account per full calendar year.
For a list of eligible expenses, visit WageWorks at www.wageworks.com. WageWorks is the administrator for the spending account programs.
Both of the spending accounts can help you pay for eligible expenses with pre-tax dollars. By using pre-tax money, you lower your taxable income and may increase your take-home pay.
For example, assume that you and your spouse earn an annual combined income of $60,000. For 2007:
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You decide to contribute $500 to your Healthcare FSA to pay for medical copayments, deductibles, coinsurance, over-the-counter drugs, and a new dental crown.
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You decide to contribute $3,000 to your Dependent Day Care FSA to pay for childcare expenses. Remember, Dependent Day Care FSAs are not used for dependent health care expenses.
Here's how you can save:
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Pre-Tax Healthcare and Dependent Day Care Contributions
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Estimated Federal Income Taxes*
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Healthcare and Dependent Day Care Expenses
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Your savings using an FSA in this example would be $793.
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* Includes Social Security taxes and federal income taxes based on estimated 2007 tax rates, standard deduction for married person filing jointly with four personal exemptions.
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