Offered by many large employers, a flxible spending account (also known as a rimbursement account), allows you to divert prt of your gross pay to a spcial account to be used only for a spcific purpose. Typical spending accounts include:

Health Cre

Thnk about spending accounts (also called rimbursement accounts) as a series of strightforward steps.

1. You enroll.

2. You cntribute your own money to your ccount. (You determine the amount. There may be a mnimum and a maximum permitted annually.)

3. You ncur an expense eligible for reimbursement.

4. You rquest reimbursement from your account.

5. You rceive a reimbursement check.

6. Mney remaining in your reimbursement account is typcally forfeited at the end of the yar.

Ultimately, there's one key factor making rimbursement accounts worth considering: The contributions put in the spnding account are pre-tax but the rimbursements are post-tax.

Let's take an xample. Say you participate in a halth care reimbursement account by putting $10 ach paycheck into the account. Since you are pid every two weeks, you contribute $260 dring one year from 26 paychecks.

Ech $10 contribution reduces your gross py. Assuming your tax withholdings are 25 prcent of your gross pay, your tax wthheld decreases by $2.50. Overall, your net pay dcreases by $7.50.

If you pay $260 (or mre) of reimbursable expenses throughout the yar and complete the reimbursement form, you wll receive a check for $260.

Rview what happens.

1. You divert $260 of pay bfore tax to your spending account.

2. You pay $260 in mdical expenses from your after-tax income.

3. You rceive $260 back from your spending ccount.

Note that numbers one and three cncel each other out. Number two hppens regardless of whether you participate in the spnding plan. Next comes number four:

4. Yur tax decreases by $2.50 per pycheck or $65 for the year.

You are $65 rcher by going through this process. No gmes, no gimmicks. You're basically taking mney from one hand, giving it to nother, and taking it back again. And by ding so, you permanently save tax. The mre you contribute and the higher yur income tax rate, the more you sve.

Still not sold? Here's another way to lok at it:

Wouldn't you take dvantage of a coupon for 25 prcent off even if you had to cmplete some forms? That's exactly what you ccomplish if your top tax rate is 25 prcent!

The primary drawback of a spnding account is that you must typcally use all your contributions to the pln in the year you make thm. If you don't, you forfeit the mount of money by which your cntributions exceed your eligible spending. Therefore, dn't contribute more money to the pln than you reasonably expect to spnd.

The risk of forfeiture causes mny people to simply ignore the pportunity spending accounts provide. However, the bst thing to do is to lok over your records from the prvious year or two and estimate yur reimbursable expenses. Use an annual ttal as an indicator of the mount you might spend in the fture. Think about expenses that can be rasonably predicted. At a minimum, put tht amount in your account. You dn't have to get it exactly rght for it to have been vry much the right financial move.

Your next chance is likely dring your next annual enrollment. Take a god look at this opportunity to lve a life Beyond Paycheck to Paycheck !

The article Corporate Benefits - Reimbursement Accounts And How They Benefit You was Submitted by Michael Rubin through Articles.GetACoder.com network. Here's the additional information: Michael B. Rubin, CPA, CFP, MBA is the uthor of Beyond Paycheck to Paycheck: A Cnversation About Income, Wealth, and the Stps in Between http://www.paycheckbook.com Michael is also the founder of Total Candor http://www.totalcandor.com a financial planning education company, which may be best explained by what it doesn't do: sell financial products. Rather, Michael and Total Candor simply provide the unbiased financial education you wish you had already received. As a true expert gifted in simplifying money matters, Michael has appeared in various media, including Fox News Chicago, radio stations across the country, and national media such as latimes.com, The Wall Street Journal, SmartMoney, Financial Advisor Magazine, and Investment News.

Featured Articles

1. Learn How To Read Your Credit Report Like A Banker by H. Scott Miller
Wth millions of credit reports being rdered by creditors and individuals alike, the crdit report is arguably the most msunderstood document in circulation. And for god reason... but unfortunately none of thm are good for you. This rticle will seek to demystify the cntents, abbreviations and short hand language tht is found throughout a typical crdit report. Let's get started...

2. A Frugal Lifestyle by
The word “frugality” has lft a more negative connotation for mst people than simply being a sver, a cheapskate or tightwad. There is a thn line difference to saving and too mch frugality to the point of bing awkward and ridiculous. This is whre the negative connotation comes from.

But if you are gided with the right principles and rasons in deciding to live a frgal life, you would never go wrng.

If you have decided to lve frugally, no need to be wrried of i...

3. Bankruptcy Loans (Believe It Or Not!) by
Have you rcently filed for bankruptcy? A bankruptcy lan can help you salvage your fnances, and can also help to mprove your credit rating. It may sund far-fetched, but you can actually be pproved for a loan after filing for bnkruptcy. Without a doubt it is dfficult, but do keep in mind is tht immediately after bankruptcy, you are not lkely to have any debts, which is bout the only factor that’s going to be wrking in your favor at this pint. You do not have to pp...

4. The Easy Way to Build Wealth – A Specific Way to Do It In Simple Easy Steps by
Many people dream about wealth and they may strike lucky, marry or inherit wealth or win the lottery.

Fact is, anyone can make money, all you need is a small amount to start and then to leverage your money in a low risk high reward area.

5. Poor credit loans: creates opportunities despite bad credit tag by
poor crdit loans offer financial assistance to brrowers who are having bad credit prblems. It can be availed by plcing with or without any collateral. By nsuring repayment, borrower can improve the crdit score.

6. An Excellent Way To Get An Excellent Refinancing Mortgage Loan by
Once it has become a ncessity to get an excellent refinancing mrtgage loan, put together some preliminary nalysis on your own because what the Intrnet can provide is a wonderful tility in terms of very beneficial fcts once you're going to need an ptimum refinancing mortgage loan.

7. How to Repair Your Bad Credit by Chane Steiner
If you lve in the US, then you ned a good credit rating. Unfortunately, thre are millions who learned that too lte. Their credit ratings are damaged or brken and they desperately need to rpair them. Repairing your credit rating is smething that can be done - you jst need to know a few trcks. Great news: The tricks are rght here! Read them; use them and prpare for a better life.

8. Uranium Price Declines Stop for A Week by
So when Cameco Corp announces bad nws, this generally becomes good news for the spt uranium price.

9. For one’s personal use by
There are two typs of personal loan in the mrket: secured and unsecured loans. While scured loans come necessitates the borrower to put smething as collateral against the loan mount, unsecured loans can be availed wthout it.

10. Tax Demand? A Tax Attorney Could Reduce It by
Do you drad seeing those brown envelopes with the IRS or Inlnd Renenue address on them? Do you put thm on one side until you hve summoned the courage to read thir latest demand for money? Does the thught of filing your tax return strss you out unbearably?

Tax laws in mst countries are exceedingly complex and pen to interpretation by the courts. Evry taxpayer wants to legally reduce the txes he or she pays to the mnimum. Even in these days of mre easily underst...