<p>I am using the collegeboard EFC calculator to get an estimated EFC, and I have questions about a few things they ask for:</p>
<p>What are “medical spending accounts” (and how do they differ from the medical/dental expenses under allowances)?</p>
<p>Does “tuition and fee deduction” refer to the tuition and fees the parents are already paying for other children?</p>
<p>Thanks for clearing these up for me!</p>
<p>medical spending accounts (MSAs & HSAs) can be one of two things:
A self-employed individual can have an MSA and a high deductible health insurance policy. If the deductible is $4800, then the person can put $4800 into the MSA account, using untaxed $ and then use the MSA money to reimburse themselves for medical expenses they have paid. Any money left at the end of the year continues to accumulate interest, like an IRA.</p>
<p>Sometimes that same jargon refers to a company benefit wherein you are given a certain amount of $ in an account to spend on medical costs. That money generally is wiped out at the end of the year.</p>
<p>our medical/child care spending account is a little different- if you don’t use it you lose it.
We misunderstood what the child care account was for- and thought it could be used for tutoring etc although we did ask when we called. We lost all the money that we had put into it.( it went to the company)
Also all the money you put into an IRA is considered to be available ( that year only as it is income that is more closely looked at not savings) for school so I imagine that the money you are able to set aside for accounts may be looked at that way too.</p>
<p>Our medical/child care spending account is like emerald’s. We put aside a certain amount of money per year for medical expenses, and this reduces our taxable income by that amount. However, we MUST use all of the money we have designated for the year by the deadline or we lose it.</p>
<p>Dental and medical expenses are for items OTHER than those included in your flexible spending (health care/dependent care) accounts. These dental and medical expenses are ones that would account for additional expenses in the year. In other words…things already paid for or covered are NOT part of this line item. Items covered by insurance are not included, but copays, and out of pocket expenses are.</p>
<p>I read in the WSJ that the IRS will now allow a grace period of several months for the flexible spending accounts (IRS 2005-42?), but it is up to employers to sign up so allow their employees can take advantage of it.</p>
<p>Yes there is a grace period of 2 1/2 months. Our eye doctor had me laughing…he says people come in and say “I have this much left…what can I buy…sunglasses, extra contacts…???” One year we bought a case of contact lense solution.</p>
<p>Our opthamologist will let us “trade in” contacts if we load up on disposables at the end of the year and then have a prescription change. :)</p>