Dependent care FSA

[Anonymous]

Anonymous wrote:I like to wait until the end of the year to submit my reimbursement claim . . . and then I immediately sock the 5K into my daughter's 529 account. Forced savings!

That sounds like a great idea.

If you were laid off or fired in the middle of the year before you submitted your claims, would you still have access to the money?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I like to wait until the end of the year to submit my reimbursement claim . . . and then I immediately sock the 5K into my daughter's 529 account. Forced savings!

That sounds like a great idea.

If you were laid off or fired in the middle of the year before you submitted your claims, would you still have access to the money?

The way my plan is set up, you would have 30 days after your termination date to file. But you will only be reimbursed up to the amount in the account. Unlike a medical FSA, where you can be reimbursed up to the amount you elected during the enrollment period.

[Anonymous]

The one area where dependent care FSA can misalign with funds in/funds out is for summer camps.

You have to pay for camps in Jan and Feb but can't get reimbursed until the camps occur in june, july, august.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I like to wait until the end of the year to submit my reimbursement claim . . . and then I immediately sock the 5K into my daughter's 529 account. Forced savings!

+1

+2, though I only put $4k of it in the 529 since that's the max VA tax benefit per account.

You can get a deduction for over 4k in VA, you just have to put it in different investments or have your spouse open an account as the account owner. The below language is from VA Tax ruling 10-240 (emphasis added):

"The Virginia college savings plan provides that each investment by the same account owner establishes a separate VEST account if the account owner, beneficiary OR portfolio is different."


So if you have 1 kid and invest 4k in the 100% stock portfolio and another 4k in the international stock portfolio you could take the the deduction on all 8k. Your spouse would count as a separate account holder, so any portfolios they contribute to would also be separate. The deduction in VA is nearly unlimited, you just need to spread it around the investment choices.

Right, I'm the PP who said I only put in $4k, and as I noted, it's because that's the max benefit per account. My H could open up a second account and also get a $4K max tax benefit for the account, but we're not really interested in tying up all college savings in a 529.

[Anonymous]

Instead of FSA, isn't it just as good to deduct everything you've spent on child are when you do your taxes?

[Anonymous]

My recollection is that the childcare deduction is smaller/lower than the amount I can sock away for the dependent care FSA.

[Anonymous]

22:29, Kiplingers explains why FSA makes more sense from a tax perspective:

http://www.kiplinger.com/article/business/T020-C001-S001-flexible-spending-account-vs-dependent-care-credit.html

[Anonymous]

Anonymous wrote:Instead of FSA, isn't it just as good to deduct everything you've spent on child are when you do your taxes?

No. Some people earn too much for the dependent care credit, but can take advantage of the workplace FSA.

You can't deduce everything, anyway. And it's not a deduction, it's a credit.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's not criminal. If you're too lazy to submit your claim in the time allotted (many times well into the following year), you should lose the $. It's not that hard.

last time i checked taking someone else's money is called stealing which is criminal

Well, someone needs to report the IRS and every state tax agency. If you don't file your tax return within a certain time frame (3 years in the district I believe), you lose out on any refund you may have been entitled to receive.

apples and oranges: the tax return stays in the tax coffin; the unclaimed FSA becomes the private entity of your FSA provider's free money. not to mention they never pay interests on the deposits in the first place.

it's a scam.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's not criminal. If you're too lazy to submit your claim in the time allotted (many times well into the following year), you should lose the $. It's not that hard.

last time i checked taking someone else's money is called stealing which is criminal

Well, someone needs to report the IRS and every state tax agency. If you don't file your tax return within a certain time frame (3 years in the district I believe), you lose out on any refund you may have been entitled to receive.

apples and oranges: the tax return stays in the tax coffin; the unclaimed FSA becomes the private entity of your FSA provider's free money. not to mention they never pay interests on the deposits in the first place.

it's a scam.

I put $5,000 into my FSA for child care. I'm in the 33% tax bracket, plus another 5% for Virginia. So, the tax savings to me is about $1,900.

I use every penny. And I am willing to overlook the sub-1% interest I would be paid for that tax savings.