Hi SillyKitty,
Thanks for asking for me.
What you have there is an FSA, a Flexible Spending Account.
The money that you designate for your employer to put into
that account comes off the top of your paycheck and is never taxed.
It's a very smart thing to do.
You have saved the following taxes on that money:
Social Security/Medicare 7.65%
Federal Tax - probably 25% (depending on your bracket)
State Tax - probably at least 5% (depending on your bracket)
In addition, taking advantage of this account, you may have
caused your entire income to drop one tax bracket.
You lower your AGI (adjusted gross income), so other things
that might not have been deductible might now be deductible.
(other medical expenses, employee business expenses, IRAs,
student expenses...)
In short, you did a terrific thing.
But, this plan is none of the ones you mentioned.
You've already gotten the benefit of excluding it from
your tax return. So, don't try to squeeze it into one of
those categories. It won't fit.
Incidentally, remember you can designate more money into
that FSA in years when you know you need to order eyeglasses,
contacts, get braces, or plan to have any kind of medical
procedures that you will have to pay part of out of pocket.
Best wishes
Your TaxMama-ga |
Request for Answer Clarification by
sillykitty-ga
on
20 Apr 2005 01:56 PDT
Okay, I lied. Two questions.
My W-2 shows in Box 14 an amount labeled "INSUR" that is the total of
pre-tax group health insurance premiums deducted from my salary by my
employer. My tax preparation software wants me to classify it as one
of the following:
- mandatory state deductible tax (CA, NY, NJ, RI, WA)
- California Voluntary Plan Disability Insurance (VPDI)
- retirement plan amounts for Maryland or Maine
- various codes for railroad employees
This amount IS included in my SSA wages in Box 1. I did not include
this amount in my line item for deductible medical expenses (which
don't matter anyway, because they are not a big enough percentage of
my income). Do I need to do any further reporting on this amount,
enter it on a form somewhere in my return?
Thanks for all of your help!
|
Clarification of Answer by
taxmama-ga
on
20 Apr 2005 05:00 PDT
Dear Silly Kitty,
You're welcome.
These are actually two more questions that should be posted separately,
especially for a $2.00 question. But, since I'm such a good sport,
what the heck.
First, let's look at those taxes - the first group:
Adjustments for items paid by seller in advance
106. City/Town tax mm/dd/yy to mm/dd/yy 142.33
107. County tax mm/dd/yy to mm/dd/yy 309.92
These should be added to your total property tax expense.
You are being charged for those amounts, and the seller
is being reimbursed in escrow.
The second group:
1200. Government Recording and Transfer Charges
1202. City/county tax/stamps: Deed $2290.00 Mortgage $2290.00 TOT $2290.00
These may not be deducted at all.
They are added to the total purchase price of your home.
When you sell the property, this will reduce your ultimate profit.
On to the next question:
My W-2 shows in Box 14 an amount labeled "INSUR" that is the total of
pre-tax group health insurance premiums deducted from my salary by my
employer.
If this IS the total of your pre-tax health insurance, it's just like
your flexible spending account. You've already gotten the tax benefit
from it.
It is none of the choices your program offers you. So enter nothing
on that line. If the program allows you a simple "other" or "pre tax
health insurace" fine. Otherwise, leave that line empty.
Incidentally, this amount should have REDUCED your wages in box 1
of your W-2.
So, does that mean you're finished entering your tax data?
You're ahead of me!
Best wishes
Your TaxMama-ga
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