Setting up a Flexible Spending Account (FSA)

Dennis Powless claven123 at gmail.com
Sun Jun 30 23:38:36 EDT 2013


I use an assets account for my has.

D

On Sunday, June 30, 2013, ilovemath wrote:

> After my post, I mulled over the idea of an Asset account instead of an
> equity account (I also called a bean-counter friend who only knew how to
> manage it from the administrator side) and I've decided to convert mine to
> an Asset.  My reasoning is that a) assets and liabilities are both balance
> sheet accounts, and b) that putting the entire election into a liability
> should not decrease my equity.
>
>
> ilovemath wrote
> > ...
> > Summary:
> > 1. Annual election decreases Equity:FSA and increases Liabilities:FSA.
> > 2. Payments for quacks and pills are entered into check register (or Cash
> > in Wallet register) and the other side goes into
> > Expenses:Medical:Taxable:[Category].  The parent account,
> > Expenses:Medical:Taxable, is NOT a placeholder.
> > 3. I create claims by going to Accounts, selecting
> > Expenses:Medical:Taxable and "Open Subaccounts," then View->Filter and
> > clearing the "Reconciled" box under the "Status" tab.
> > 4. I record claims by reconciling Expenses:Medical:Taxable and Including
> > Subaccounts, then checking off all items included in the claim.
> > 5. After reconciling, I create a journal entry increasing
> > Expenses:Medical:Taxable and reducing Expenses:Medical:Non-Taxable (FSA).
> > 6. Reimbursement checks go into the checking account register with the
> > balancing entry going into Equity:FSA.
> > 7. The goal is to have Equity:FSA=0 at the end of the year and
> > Expenses:Medical:Taxable=0.  If they're not, the Equity gets a journal
> > entry moving the balance to Expenses:Medical:Money I've Tossed and
> > Expenses:Medical:Taxable is moved to Expenses:Medical:Schedule A.
> >
> > This covers every aspect I've faced, and it is effective if you have a
> > run-up or grace period.
> >
> > Details:
> > ...
> > At the beginning of the year I have a scheduled transaction to decrease
> my
> > FSA Equity account (I actually have a subaccount for each year, but that
> > wasn't one of my brightest ideas) and increase my FSA liability, and each
> > paycheck reduces the liability by the deduction.  As an aside, I'm not a
> > bean counter (my undergrad degree was applied math so I have no patience
> > for arithmetic), but I am pretty confident that the appropriate place for
> > the annual allocation is in an Equity account and not an Asset.  An asset
> > is liquid or can be converted to liquid, and an FSA doesn't fall into
> that
> > category--it doesn't have a liquid value until a claim is submitted.
> > ...
>
>
>
>
>
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