October 18, 1999
Volume 52, No. 8
Questions and answers on flexible spending accounts
At the end of the year, I find that my out-of-pocket health care and dependent-care expenses have really added up-but not enough to deduct off my taxes. What can I do?
You might want to consider signing up for a flexible spending account (FSA) during open enrollment from Monday, Oct. 18, through Friday, Nov. 12.
With an FSA you reduce your taxable income by paying for qualifying expenses with before-tax dollars. For example, if you spend $200 a year on disposable contact lenses and pay 34 percent in federal and state income taxes, just look at the difference an FSA makes:
The FSA saves $68 that would have been spent on income taxes!
How do flexible spending accounts work?
Emory offers two flexible spending accounts: (1) health care and (2) dependent care. You may participate in either or both. The amount you designate will be deducted from your paycheck and deposited in your FSA(s), before any taxes are calculated. You can then use these funds to pay yourself back for eligible health care and dependent care costs. By participating, you will have less taxable income-you pay no federal, Georgia or Social Security taxes on the amounts deducted for flexible benefits. The following example, based on a $30,000 salary, illustrates the FSA advantage
Total tax savings with FSA: $1,272.
All examples given are for illustrative purposes only. Actual savings may vary based on individual circumstances.
Wynell Lauver is communications specialist for Human Resources.