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When and how should FlexContrib category be used?

What is the purpose of the _FlexContrib income category (flexible account contribution), in what scenario is it used, and how could it be used in the paycheck wizard when the paycheck contains an FSA contribution by the employee?

I already reviewed many discussions on this topic and all are about the pre-tax deduction Flex Spending but no mention of the _FlexContrib, hence my curiosity. Thank you.

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Accepted answers

Jim_Harman

You are right, the Paycheck Wizard sets up a transfer to the FSA account so it would not use the _FlexContrib Category.

I suppose you could use that Category if you are not tracking the FSA account in Quicken. Then when you make a contribution to that account you could use the _FlexContrib Category and it will appear as a salary reduction on the Tax Schedule report. Note that the Salary Category is for gross base salary, prior to any deductions.

Jim_Harman

Assuming you are tracking the FSA account in Quicken, I don't think there is any reason you would want to use the _FlexContrib Category.

To expand on what I said above, the place where Quicken tracks your taxable income is in the Tax reports and the Tax Planner. In your example, I have $1,000 of gross income and a $50 contribution the the FSA. Using the "Gross amount" option in the Paycheck Wizard, it records $1,000 as the gross salary using the Salary Category and $50 transferred to the FSA account. $950 is deposited in my checking account. The paycheck looks like this:

The Tax Schedule report looks like this, so everything has been recorded correctly

All comments

Jim_Harman

_FlexContrib is used by the Paycheck Wizard to generate paycheck deposits that include pre-tax contributions to a Flexible Spending Account.

When you set up a paycheck that include these contributions, Quicken creates an asset account that they are transferred to.

Thanks @Jim_Harman

Maybe I am not understanding how to best setup or allocate the FSA contributions in the paycheck wizard.

In the paycheck wizard there is already a Pre-Tax Deduction selection for Flex Spending which will create a Flex Spending account and transfer the contribution funds into it. That is a [Flex Spending] transfer category. And naturally, when I go to categories, the usage value for _FlexContrib remains zero. So the pre-tax Flex Spending option is not using the _FlexContrib

Testing in the paycheck wizard with a $1000 Salary and $50 FSA contribution, the taxable income should be $950 (all other tax items left blank for simplicity). So I tried two paycheck wizard scenarios:

a) I put the contribution under the Pre-Tax Deduction of Flex Spending

It created the Flex Spending account and transferred $50 into it
Taxable income = $1000
_FlexContrib usage = 0

b) I put the contribution under the Pre-Tax Deduction of Other > _FlexContrib category

Nothing added to the Flex Spending account, as expected
Taxable income = $950
_FlexContrib usage = 1

Jim_Harman

You are right, the Paycheck Wizard sets up a transfer to the FSA account so it would not use the _FlexContrib Category.

@Jim_Harman

Thank you for your response and we are on the same page. To me comes down to personal preference or trade-off of allowing the paycheck contribution to automatically update the FSA account in Quicken and managing the impact on taxable income. Seems like the best practice of using the _FlexContrib has not been well defined. Regards.

Jim_Harman

Assuming you are tracking the FSA account in Quicken, I don't think there is any reason you would want to use the _FlexContrib Category.

The Tax Schedule report looks like this, so everything has been recorded correctly

This is very strange. In all of my testing I am getting opposite result of yours where the Tax Schedule Report (and the YTD Taxable Income on the dashboard) do not look right if I contribute to the FSA Account. I don't get it! I just deleted everything and started from scratch with the same result.

(edited images after redone to match yours)

Jim_Harman

As I said above, Salary is not your taxable income, it is your gross income.

Set up the paycheck as in your column a. Go to the Flex Spending Account. After accepting the paycheck, you should see the contribution as a transfer from the account where the paycheck was deposited. Click on the gear and select Edit account details.

Tax Deferred should be set to Yes. This causes the account to be excluded from the Tax reports.

Click on Tax Schedule and make sure Transfers in is set as shown below. This sets the tax line item for the incoming transfers and causes the contribution transfer to reduce your taxable income as shown on the Tax Schedule report

That is how the Paycheck Wizard set up the Flex Spending account in my test file.

@Jim_Harman

Aha, I was missing the crucial step of properly assigning the "Transfer in" tax schedule within the Flex Spending account. Doing so, the tax schedule report correctly shows the FSA deduction.

I suppose you could use that Category if you are not tracking the FSA account in Quicken. Then when you make a contribution to that account you could use the _FlexContrib Category and it will appear as a salary reduction on the Tax Schedule report.

Assuming you are tracking the FSA account in Quicken, I don't think there is any reason you would want to use the _FlexContrib Category.

So these two explanations you provided earlier are the answers to my original question.

THANK YOU!