Flexible Spending Accounts. Do you have one, do you use it? If you do, listen up!
FSA’s are offered by many employers as a way for employees to save money on taxes. Employers deduct money from your paychecks for medical expenses and/or dependent childcare. You choose the amount (within limits) that you think you are going to spend.
Okay, sounds easy, even great. You save money because that money is not taxed. There are lots and LOTS of rules and I don’t know them, so if you are reading this to learn how to use them, STOP!
I can only tell you what I did that really screwed me up and hope that you don’t do the same thing.
Every employer is different but these accounts are generally the same because they follow a set of IRS rules.
But here is my story, sad but true!
As you know, since I am heading into a BK, I decided to see when my daughter would not be eligible for the Dependant Care piece of the FSA. So I called HR and they sent me a little pamphlet that I read. It stated the child must be 13 or younger. But OMGosh, my daughter turned 13 last May.
Now what? OMG, am I in trouble? Am I going to jail? I about died. Okay deep breath.
I called the third party company that we use to administer the plan. Here is what they told me I had to do… IMMEDIATELY:
1) Stop Payroll Deductions
2) Send them a check for $3187.50 NOW, like TODAY!
I was floored and you can believe shocked. Number one, why should I pay back money they took out of my check and number two, wha, huh?
I didn’t get it at all. But you know what, neither did my Human Resource department. Can you believe I am the only one in the world who screwed this up? Anyway. I was more than a little scared and finally, I got one part of the answer back from HR today.
1) I can either pay back the whole amount to the FSA company and then they can tax it and send me a check, or
2) I can wait until the end of the year and have the IRS help me figure it out. I think this year I will have to hire a tax person!
The other part to the question is what happens to the remaining total $1312.50 that they are going to continue to deduct from my paychecks until the end of the year?
Guess, what, that is the use it or lose it part. Normally, you cannot change your deductions mid year. If you don’t use, it’s gone baby, gone.
These are extenuating circumstances and I am still waiting to hear what, if anything the company can do. I certainly don’t want to kiss $375.00 a month goodbye.
I won’t even really know the true cost of this mess is until tax time. Very scary since I don’t even know how much money I am going to have because of the BK I am filing in a couple of weeks!
OMG, can it get any worse?
I have a feeling it can.