Reimbursement Account Tax Savings

Example 1:

Annual Household Income: $24,700.00 Tax-Filing Status: Single Withholding Allowances: 1

Without Flex With Flex
Weekly Earnings $475.00 $475.00
Medical Contribution $0.00 $10.00
Taxable Wages $475.00 $465.00
Taxes & Withholding $114.52 $111.39
Net Take Home $360.48 $353.61
Out-of-Pocket Medical Expenses $10.00 $0.00
Spendable Income is $350.48 $353.61
Weekly Savings   $3.13
Annual Extra Spendable Income $3.13 X 52 Weeks = $162.76

 

Example 2:

Annual Household Income: $45,000.00 Tax-Filing Status: Joint Withholding Allowances: 3
Without Flex With Flex
Weekly Earnings $865.38 $865.38
Medical Contributions

Dependent Contributions

$0.00

$0.00

$25.00

$96.15

Taxable Wages $865.38 $744.23
Taxes & Withholding $184.48 $148.56
Net Take Home $680.90 $595.67
Out-of-Pocket Medical &  Dependent Care Expenses 121.15  
Spendable Income is 559.75 $595.67
Weekly Savings $35.92
Annual Extra Spendable Income  $35.92 X 52 Weeks =  $1,867.84

* These are examples only. Please consult your tax advisor to estimate your own tax savings.

Many households with earnings of $40,000 or more find the Dependent Care Assistance Account more advantageous than the tax credit. GDI urges you to consult with your tax advisor.