- »
Am I better off using the child care tax credit on my income tax return or the Dependent Day Care Spending Account?
That depends on your personal situation. The chart at the bottom of
this link will show you the approximate savings under each for certain situations and family income levels. You may also want to consult a tax advisor.
- »
If I have braces put on and pay the full cost up front, can I be reimbursed the full amount from my account?
Orthondontia services are the only type of services that can be considered "incurred" when you make a prepayment. You must be reimbursed in the plan year in which the payment was made with the understnding that the services will begin at that time.
- »
Are there limitations on the kind of expenses I can claim through my Flexible Spending Account?
Yes. IRS publications
502 and
503 list most of the services that can be claimed. One exception is over-the-counter drugs and medical supplies. Certain over-the-counter drugs and medical supplies can be claimed through your Health Care Spending Account but not on your income tax return.
- »
Once I sign up for Spending Accounts, do I have to keep contributing the same amount each year?
No. In fact, you must re-enroll each year even if you want to contribute the same amount as in past years. Each year during Annual Enrollment, you decide whether to participate and how much, if any, to put into each account. If you want to participate one year and drop out the next, you can do it. However, you cannot change your decision in the middle of a plan year unless you have a Change in Status.
- »
Why do I have to re-enroll in the Spending Accounts each year even if I want my contribution amount to stay the same?
This requirement is not part of the law that governs Spending Accounts, but most employers have this rule. Because contributions can’t be changed during the plan year unless you have a Change in Status, it’s important that you make the right decision up front so you won’t forfeit unused contributions. Since your needs may change from year to year, you need to carefully consider how much you will need to contribute each year.
- »
I’m going to enroll in the Spending Accounts for the first time this year. If I have an expense the first week in September, can I get reimbursed immediately?
You can submit any expense that you incur on or after September 1. However, your claim will not be processed until you receive your first paycheck and your first contribution goes into your account. For biweekly paid employees, this will be sometime in September. For monthly paid employees, claims will not be processed until after the October 1 paycheck.
All of the money you will contribute during the plan year is available from the beginning of the year for the Health Care Spending Account. You can be reimbursed from the Dependent Day Care Spending Account only for an amount you have already contributed to the account.