We got Clint. From Ponce-y Inlet Florida.
I think it's Ponce Inlet, but I'm not sure.
Ponzi scheme, Florida. "Hi, Andi. Wave emoji." What did we do without emojis, Al?
I don't know. We didn't know how we felt just reading stuff.
Smiley face. "Could you pass along this question for Big Al for me, please? I have elected
to have $2500 taken incrementally from my bi-weekly paychecks in 2018. While plugging
my information away into the major online tax preparation site, I've noticed that there
is no line item for FSA funds. I checked with four different online preparation websites
and cannot get a clear answer. Has this calculation already been formulated in my adjusted gross
income? Hey, thank you so much for your help."
Clint, that's a great question. So FSA, maybe I'll talk about what that is. Flexible Spending
Account. Some companies offer this. Not all, but some companies offer it, and generally,
you can put up to $2500 into a flexible spending account. It comes out of your pay. So you
actually elect it to come out of your pay pre-tax. That's right. And so what happens
then is, now instead of making $100 or whatever you make for the day, you make $90.
Wow, Clint. Jeez. (laughs)
(laughs) I was just trying to give an example. Be quiet.
So Clint. You're only making a hundred bucks. (laughs)
Per hour. (laughs) Anyway, so the point is, your pay is already reduced by this. And what
happens is this money sort of gets set aside and can be used for certain things in accordance
with the plan. And if you don't use it, you lose it at year end, but you never pay tax
on it. Now, it's on your W-2. It's on line 14, which is the "other" box. It doesn't affect,
it's just information only. So rest assured that it's already been deducted from your
gross pay.
So I guess Clint, to say it this way too, if you have a 401(k) through your employer,
and let's say that you put $10,000 into your 401(k) plan pre-tax, and you make $100,000 a year,
there is not a line item on the 1040 for 401(k)s either. It's going to come out pre-tax, it's
going to show right on the front line - you're not going to add that in unless you're self-employed.
Yeah but I will say, the tax software does want you to put the 401(k) numbers in there,
but it does not require the FSA because it's already been deducted. It's not relevant to taxes.
Okay. I did not know that... why would you put have to put the 401(k) in the tax software?
Because what if you have two employers and you maxed out both plans? The software is
going to say you did too much, you gotta pay some back.
Got it. How about my... well the FSA is a payroll deducted - I could do to FSA plans
then too is what you're saying?
No one would know that.
No... All right, there you go Clint. Get another job because you're only making 100 bucks anyway. (laughs)