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2BadSoSad
LIF Adult
Member since 8/12 6791 total posts
Name:
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Does anyone do the Childcare FSA?
At my current company, for years, we were reimbursed up to 25% for our daycare costs. It was SO nice! We were just notified that as of Jan 1st they are discontinuing the program and are replacing it was a childcare FSA.
Does anyone do this? I know they don't take the taxes out, which is nice but they are trying to say its the same thing.
Its not really though. From what I understand, we can contribute up to $5000 per year. I was being reimbursed $2650 per year.
So am I understand this right? If I did the math correctly, in order to max out the $5K, minimally, I would have to contribute 96/week for 52 weeks. So every month, thats an additional $400/mo up front minimally, plus the $220 I was being reimbursed for. So thats, an additional $620 OOP per month, in addition to regular daycare costs. What was costing me $660/mo is now going to cost me $1280 up front every month?
Im just stuck deciding whether its worth it to enroll is CFSA or just take the tax credit to avoid the additional upfront OOP cost every month.
Anyone have any feedback or advice on this?
Anyone do this?
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Posted 12/6/13 10:37 PM  |
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alli3131
Peanut is here!!!!!!
Member since 5/09 18388 total posts
Name:
Allison
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Does anyone do the Childcare FSA?
I do it. It's pre tax dollars out of your check. It works out for me. I have the max taken out and get a reimbursement every 1k. I could donor more often but figure that's a good amount.
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| Posted 12/7/13 6:56 AM |
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MrsW326
LIF Adult
Member since 11/10 1132 total posts
Name:
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Re: Does anyone do the Childcare FSA?
I do the max as well. My program reimburses me 2x a month via direct deposit, totaling just shy of $400.
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| Posted 12/7/13 7:33 AM |
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dlj97
LIF Adult
Member since 7/10 4399 total posts
Name:
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Does anyone do the Childcare FSA?
I'm confused? How could this raise your costs? It should be sort of the same in the end. All you are doing is setting money aside to pay with pre-tax money.
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| Posted 12/7/13 7:56 AM |
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Does anyone do the Childcare FSA?
I do it. You take pretax money out to pay for what you are paying for anyway and being reimbursed with your own money but not being taxed for making that money...you do not end up
paying more
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| Posted 12/7/13 8:08 AM |
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noworlater
LIF Adult
Member since 2/11 1528 total posts
Name:
Now!
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Re: Does anyone do the Childcare FSA?
I always stayed away from fsa because it confused me but just spoke with my hr the other day about it. They said the out of check money can be set up direct deposit monthly-don't need to wait till end of year. So your paycheck will look smaller but you're getting the money back and more in a different check..more because its not taxed.
I'm sure there is paper work involved and receipts needed or something.have to be on top of it because you can lose the money put aside if you don't claim it. Think of how much tax is taken out of 5000 that's the money you make. From what I understand...
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| Posted 12/7/13 9:18 AM |
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ChristinaM128
LIF Adult
Member since 8/12 4043 total posts
Name:
Christina
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Re: Does anyone do the Childcare FSA?
Yes, you will still be paying more for daycare even with fsa than you are now with your company paying a huge chunk of the cost. But if they are discontinuing that particular incentive and you are 100% responsible for daycare costs then fsa is the way to go.
The 5K that will be taken out of your paycheck is pre-tax, so it drops your taxable income by 5K. That could very well drop you to a lower tax bracket. Additionally, you would normally have to make something like 7.5K to "take home" 5K when you think of all the deductions that typically come out of your paycheck. This way, you are making 5K and bringing home 5K after you submit the reimbursements.
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| Posted 12/7/13 9:29 AM |
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ChristinaM128
LIF Adult
Member since 8/12 4043 total posts
Name:
Christina
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Re: Does anyone do the Childcare FSA?
Posted by ChristinaM128
Yes, you will still be paying more for daycare even with fsa than you are now with your company paying a huge chunk of the cost. But if they are discontinuing that particular incentive and you are 100% responsible for daycare costs then fsa is the way to go.
The 5K that will be taken out of your paycheck is pre-tax, so it drops your taxable income by 5K. That could very well drop you to a lower tax bracket. Additionally, you would normally have to make something like 7.5K to "take home" 5K when you think of all the deductions that typically come out of your paycheck. This way, you are making 5K and bringing home 5K after you submit the reimbursements.
When you do the math, fsa and your co. giving 25% would come out roughly even if there was not a 5K cap. I spend close to 14K on childcare a year, yet I can only claim up to 5K, roughly 1/3 of the calendar year if I look at it that way. It would almost be like your company saying they would reimburse you 25% January-April only!
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| Posted 12/7/13 9:33 AM |
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nycgirl
Angels!
Member since 3/09 7721 total posts
Name:
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Re: Does anyone do the Childcare FSA?
Yep. Up front cost is higher to do with a FSA.
Stinks your company gave up 25% of childcare.
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| Posted 12/7/13 9:50 AM |
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2BadSoSad
LIF Adult
Member since 8/12 6791 total posts
Name:
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Re: Does anyone do the Childcare FSA?
Posted by dlj97
I'm confused? How could this raise your costs? It should be sort of the same in the end. All you are doing is setting money aside to pay with pre-tax money.
Its not necessarily, its just raising my up front OOP costs.
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| Posted 12/7/13 10:09 AM |
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alli3131
Peanut is here!!!!!!
Member since 5/09 18388 total posts
Name:
Allison
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Re: Does anyone do the Childcare FSA?
Posted by 2BadSoSad
Posted by dlj97
I'm confused? How could this raise your costs? It should be sort of the same in the end. All you are doing is setting money aside to pay with pre-tax money.
Its not necessarily, its just raising my up front OOP costs.
The only reason you are feeling an upfront OOP cost is that your company is no longer giving you money. You know have to pay it all yourself.
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| Posted 12/7/13 12:39 PM |
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WannaBeAMom11
LIF Adult
Member since 1/11 7391 total posts
Name:
Name
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Does anyone do the Childcare FSA?
Tax wise as long as you make more than $40k doing the $5k fsa is better money wise then doing the deduction at the end of the year.
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| Posted 12/7/13 7:13 PM |
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Wishing4Baby
LIF Zygote
Member since 1/10 10 total posts
Name:
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Does anyone do the Childcare FSA?
Message edited 12/7/2013 9:44:24 PM.
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| Posted 12/7/13 9:40 PM |
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2BadSoSad
LIF Adult
Member since 8/12 6791 total posts
Name:
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Re: Does anyone do the Childcare FSA?
Posted by Wishing4Baby
If it is the same company, what they told me when I said that, is yes, the FSA was offered and once they started the FSA they should have discontinued the reimbursement but never did.
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| Posted 12/7/13 9:45 PM |
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NYCGirl80
I love my kiddies!
Member since 5/11 10413 total posts
Name:
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Re: Does anyone do the Childcare FSA?
Posted by 2BadSoSad
At my current company, for years, we were reimbursed up to 25% for our daycare costs. It was SO nice! We were just notified that as of Jan 1st they are discontinuing the program and are replacing it was a childcare FSA.
Does anyone do this? I know they don't take the taxes out, which is nice but they are trying to say its the same thing.
Its not really though. From what I understand, we can contribute up to $5000 per year. I was being reimbursed $2650 per year.
So am I understand this right? If I did the math correctly, in order to max out the $5K, minimally, I would have to contribute 96/week for 52 weeks. So every month, thats an additional $400/mo up front minimally, plus the $220 I was being reimbursed for. So thats, an additional $620 OOP per month, in addition to regular daycare costs. What was costing me $660/mo is now going to cost me $1280 up front every month?
Im just stuck deciding whether its worth it to enroll is CFSA or just take the tax credit to avoid the additional upfront OOP cost every month.
Anyone have any feedback or advice on this?
Anyone do this?
Ehhhh. This math totally doesn't make sense. CFSA is pre-tax - which means you aren't paying taxes on that part of your earned income. You left that out of your calculations.
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| Posted 12/8/13 2:34 PM |
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