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Best way to account for FSA account

Leslie Jones

Mac Version 8.3.0 (Build 803.58807.100) macOS 13.7.8

What is the best way to account for an FSA? Right now I have it as a separate account and categorize the expenses that I use the CC for as usual medical or dental. But when I submit a claim to FSA and they reimburse me with a direct deposit it is after all my money. Do most people count that as income since it was deducted from their paycheck? Any help would be appreciated.

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Accepted answers

jtemplin

When I had an FSA, I modeled it as a checking account in Quicken.
The paystub deductions were recorded as a transfer into that account.
Expenditures were entered into the FSA account with an appropriate category ("Medical", "Dental", etc.)
The reimbursement into my main checking account was entered as a deposit with the same category as the matching FSA transaction.

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jtemplin

Tom Young

No, the money received out of your FSA isn't income because it's (generally) YOUR money, already counted in your "income."

The FSA should be on your balance sheet as some form of "asset." A checking Account in Quicken should work.

Each pay check deducts money out of your pay to fund the FSA Account. So you account for that in your paycheck entry as a form of non-taxable income with the "deposit" going to your FSA Account.

When you use your credit card for medical expenses you can account for those, as you are currently doing. The money coming out of the FSA now is simply a Transfer between the FSA Account and your checking Account.

Leslie Jones

Jtemplin, "The reimbursement into my main checking account was entered as a deposit with the same category as the matching FSA transaction." Doesn't that double count that expense? If I pay a provider with a different CC I would expense that in Medical for instance. Then when I submit the claim and get reimbursed if I use the same category (Medical) doesn't that Zero out the expense? The problem I get into is making an income and expense report. If I include the FSA account as I am doing now it seems to count things twice. In order to count the expense it ends up counting the reimbursement as income, which it is not. I'll try to set it up as a checking account and see what happens. Right now it is setup as a cash account with my total benefit listed as 12/31/25. Also if you count the reimbursement in the FSA checking account what happens to your entry in you real checking account? Sorry for all the questions.

John_in_NC

You can choose to display your FSA as either a checking or an asset account, with the main difference being if you want the $ lumped in with your liquid cash accounts. It depends on what you want-either way works.

I think transfer transactions are your friend here. Think of it like moving money between pockets, so both sides of the transfer cancel out and won't show up on your reports. I think that is the missing key here.

Transfer the money into your FSA when you fund the account from your paycheck. Yes, you have to split out your paycheck. It isn't income here as you are simply moving (transferring) $ to another account.

You apparently charge your medical bills to your CC. Fine-enter that as the medical expense.

Next, you must (likely manually) make a transfer transaction out of your FSA to the (checking) account where you receive reimbursement: This reduces your FSA balance accordingly, and the transfer won't show as income/expense.

When the reimbursement deposit occurs, this should be matched to the checking side of the FSA transfer. Thus, it won't show as income and not show on reports as income.

jtemplin

https://community.quicken.com/discussion/comment/20508383#Comment_20508383

If you're including your FSA in your reports, the expenditure out of the FSA is a negative number (an expense), and the reimbursement into your main checking account is a positive number (a deposit). They zero each other out if you use the same category.

John_in_NC

@jtemplin You are correct regarding regarding how the same category transactions (of equal amounts) will cancel out.

But, I suspect there is a caveat here: the "CC" the OP is not a debit card from the FSA (if provided.) (There wouldn't be be a reimbursement check if that were the case.)

I think the "CC" is another personal card. That transx will show the expense on reports. Transfers will have to be used to reduce the FSA balance accordingly/match the reimbursement check so said check does not show as income on reports. The only report item desired here is the expense(s) in the CC account.