Termination & Flexible Spending/Dependent Care benefits

[goyanks]

What is the name of your state (only U.S. law)? NY

I was just let go and received severance through August 2010.

My firm told me that I can continue to deduct Flexible Spending and Dependent Care from my payroll through Aug while I am still receiving severance paychecks.

However, for the last 4 months of the year I will need to mail in a check equal to one month's amount of the deductions. this will be paid by after tax dollars.

The question is can I claim the 4 months that I am paying directly to my employer on my 2010 taxes so that I receive the tax benefit even though it will not be paid in my payroll.

Thanks in advance.

 

[pattytx]

The question is can I claim the 4 months that I am paying directly to my employer on my 2010 taxes so that I receive the tax benefit even though it will not be paid in my payroll.

Thanks in advance.

As what, an itemized deduction?

Do you have some big medical expense coming up where you would need the extra money at the end of the year?

 

[goyanks]

As what, an itemized deduction?

Do you have some big medical expense coming up where you would need the extra money at the end of the year?

I am not sure what to claim as on taxes.

If I continue to deduct Flex spend and Dep Care, my firm told me that I will have to pay for the entire year and can not stop after 6 months of severance.
I will need to pay the last 4 months out of pocket regardless.

While I will have expenses to cover the money, I would like to make sure that I can claim as a tax deduction even though outside of payroll.

Thanks

 

[pattytx]

I'm confused.

FSAs for medical can be paid on an after-tax basis after termination (I'm not sure about dependent care) and apparently, the employer is keeping you as an "employee" until your severance pay runs out.

However, there is no advantage to you in contributing on an after-tax basis to the medical FSA unless you have a big expense coming up and that's how you want to use any balance you may currently have. Contribute after-tax dollars to the plan or pay for medical care/prescriptions/etc. after-tax; what's the difference?

Even less of a reason to contribute to the Dependent Care plan on an after-tax basis. With a DCP, you are limited to reimbursement equal to the amount you have contributed to date.

I'm not sure this is worth even continuing; but hold for further responses. Someone may have some reasons I haven't thought of.

 

[goyanks]

I'm confused.

FSAs for medical can be paid on an after-tax basis after termination (I'm not sure about dependent care) and apparently, the employer is keeping you as an "employee" until your severance pay runs out.

However, there is no advantage to you in contributing on an after-tax basis to the medical FSA unless you have a big expense coming up and that's how you want to use any balance you may currently have. Contribute after-tax dollars to the plan or pay for medical care/prescriptions/etc. after-tax; what's the difference?

Even less of a reason to contribute to the Dependent Care plan on an after-tax basis. With a DCP, you are limited to reimbursement equal to the amount you have contributed to date.

I'm not sure this is worth even continuing; but hold for further responses. Someone may have some reasons I haven't thought of.

Thanks for the help. Work was giving me incorrect info regarding pre-tax vs post tax and was causing confusion. You are correct you can only put after tax $ into FSA after termination.

Thanks again.

 

[pattytx]

I'm confused.

FSAs for medical can be paid on an after-tax basis after termination (I'm not sure about dependent care) and apparently, the employer is keeping you as an "employee" until your severance pay runs out.

.

Just to clarify a bit, an FSA (and a DCP) is actually a "salary reduction" issue and, if there is no "salary", there can be no pre-tax deduction. If you're paying it directly, therefore, that's why it can't be pre-tax.