Managing U.S. Flexible Spending Accounts

[Robin Chattopadhyay]

Here's how I have my FSA account set up. I think this setup works well for
me.

Since I have the full value of the FSA on 1/1/2010, I treat the FSA
contribution as "unearned income" with these two accounts:
*Assets:Current Assets:FSA
*Liabilities:Current Liabilities:Unearned Income

On 1/1/2010, I debit (increase) the asset account for the full-year's
contribution and "credit" the corresponding liability account.

Each payday, I enter the full amount of the income -- as you do -- and one
of the splits is to the Unearned Income account. At the end of the year, the
Unearned Income account will equal zero -- having been offset throughout the
year.

As I spend down the FSA dollars, I enter the transactions into the FSA asset
account as I incur them. Therefore, I know at any given time what is still
available to me in the FSA account.

Robin


On Mon, Jan 4, 2010 at 1:51 PM, Thomas Scofield <scofield at calvin.edu> wrote:

>
> I am a new user of GnuCash, and someone who has not had an accounting
> course of any kind.  (On the other hand, I am a mathematician, and the
> basics of double-entry accounting seem fairly intuitive if I can ever get
> the principle behind the labels "credit" and "debit".)  I have searched the
> archives for advice about setting up flexible spending accounts, and have
> only come across the post by John R. Carter on Jan. 5, 2009.  It is with
> that post in mind I am posing my question.
>
> I have created accounts
>  Liabilities:FSA
>  Equity:FSA
> after which I entered a transaction in Liabilities:FSA placing my year's
> allotment in the "Increase" column.  (The transfer account is Equity:FSA,
> where now the same amount appears in the "Decrease" column.)
>
> I am now at the point of entering a paycheck.  I placed the full amount in
> the "Income" column of a an "Income:Salary" transaction, and split the
> transfer account.  It is split many ways, as I am sending some to several
> different bank accounts, some to a "Expenses:social security" account, some
> to "Expenses:medicare", etc.  One of the accounts in the transfer split is
> "Expenses:FLEX".  Now, if I follow the advice of Mr. Carter, an entry in
> "Expenses:FLEX" would have its "double" appear in "Equity:FSA", decreasing
> the amount there from the initial FLEX allotment.  That makes sense to me,
> but it also makes sense that I should have it mirror what came out of my
> paycheck, and you (of course) cannot do both.  Any suggestions as to a
> sensible approach?
>
> Thomas L. Scofield
> --------------------------------------------------------
> Associate Professor
> Department of Mathematics and Statistics
> Calvin College
> --------------------------------------------------------
>
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