Which Person's FSA to use

[BigRed]

So, both my spouse and I have FSAs available, and I wanted to check whether my analysis was right on whose to use.

As I understand it, FSA contributions reduce your FICA wage.  My spouse earns less than the wage limit, and I earn more than the limit.  So, my thinking is that by doing the FSA deductions through my spouse, there would be an additional tax savings of 6.2% + 1.45% on around $6500 (we don't pay the medicare surtax).  That's a savings of around $500.  We will be using my company's medical insurance, since it's considerably cheaper.

There is a corresponding loss in SS benefit down the line, of course.  However, my spouse will almost certainly be past the second break-point, so I'm thinking the savings now would be worth it.

Is this thinking correct?

[Proud Foot]

Your analysis looks correct although your savings will be less than $500 since there is not a wage cap of the 1.45% medicare tax. I would check with her HR to make sure she can still use the FSA if she is not using their insurance.  I don't see why they wouldn't let you do this.

ETA: Don't forget that the SSA increased the limit a decent amount for 2017. It will be $127,200.

[BigRed]

Thanks.  Good point on the Medicare Tax.

I was also concerned on the FSA, without using her medical, but it's a separate form, so should be ok (yes, everything is submitted via paper forms, each year.)

[seattlecyclone]

Yep, sounds like valid reasoning to me. We're doing HSA contributions through my wife's insurance as much as possible next year for the same reason.