Managing U.S. Flexible Spending Accounts

[David T.]

John--

It's been a couple of weeks since I took a look at this, and I am just coming back to it. I think I have found a flaw in your directions which explains my observed results. You emphasized that I should create a debit from my Income account into my Equity account, and after some time thinking about it, I think it's supposed to go into the Liability account after all. Here's why I think that:

>From the way you've described it, the FSA Manager "loans" me $5000 at the beginning of the year. The loan is documented in the Liability account as a negative balance. Each paycheck, I pay back a little bit of that loan, until, at the end of the year, I have paid off the loan, and my liability account is back to zero. So the correct transaction each paycheck is to debit the Income account and pay off the Liability.

I think this is right; now I just have to figure out the payment/reimbursement part...

David

--- On Mon, 1/12/09, John R. Carter, Sr. <john at jrcarter.com> wrote:

> From: John R. Carter, Sr. <john at jrcarter.com>
> Subject: Re: Managing U.S. Flexible Spending Accounts
> To: sunfish62 at yahoo.com
> Cc: "gnucash" <gnucash-user at gnucash.org>
> Date: Monday, January 12, 2009, 7:35 AM
> On Jan 11, 2009, at 7:41 PM, David T. wrote:
> 
> > John--
> >
> > Thanks for working with me on this. First note: you
> can change the  
> > register labels under
> Edit->Preferences->Accounts where there is a  
> > "Use formal labels" checkbox.
> 
> Wonderful! Thanks. An old dog CAN learn new tricks!
> 
> > When I check this and look at my Equity account, I see
> that my  
> > initial transfer to Liabilities:FSA is entered as a
> debit in Equity  
> > and a credit in Liabilities. So that seems right.
> >
> > However, the transfer from Income:Wages shows as a
> Debit in both  
> > accounts. It works out in the Income account, but has
> the reverse  
> > effect in the Equity account.
> 
> It is supposed to be a debit in both Equity:FSA and
> Income:Wages.  
> Recall that a debit in Income is a decrease, but a debit in
> Equity is  
> an increase. So the amount in Equity goes to a lesser
> negative value.
> 
> > I haven't even gotten to the actual transactions
> beyond the payroll  
> > deductions. I'll troll those depths once I get
> this part working  
> > right.
> 
> Now that I have unchecked the box for "Use formal
> labels" I can  
> believe in what I see. Thanks.
>