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Fake Expenses on FSA
Old 09-16-2014, 10:06 PM   #1
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Fake Expenses on FSA

I just set up my FSA deductions today (pre-tax deductions on transit and parking). A third party vendor "manages" the process. Basically, the IRS stipulates that you can deduct a max of $130 a month for transit related expenses and $250 (I think) a month for parking expenses.

I do incur about $100/month in transit expenses. However, a coworker mentioned that the vendor that manages this process does not ask for receipts or verify the expenses so one could inflate their expenses a bit. She mentioned you could set up recurring transfers to your checking account so it essentially is just a tax evasion method.

So, I decided to put $130 a month for transit + $100 a month for parking. This results in about $600 annual savings to me. I was quickly enrolled in the program online, and noticed that you do have to submit receipts with your claim for reimbursements.

On top of this, my administrator saw my annual election as my desire to contribute the full annual amount between now and December, so I'm looking at $2,760 going into my FSA between now and December!

The plan stipulates that you cannot make election changes unless a major life event occurs, and you can only roll over $500 to 2015 and you lose the rest.

So now I am all worried I'll have all this money going into my FSA that I won't be able to use. I just submitted a word doc as my "receipt" with a sentence on it saying the funds were used for transit expenses to see if the vendor will approve it.

What do you think I should do? Please no lectures on the ethics of this .... I'm not one to be a cheater, being relatively new to "corporate america" I just thought this was one of those loopholes that everyone took advantage of but maybe I am wrong?

Since I just set this up today, should I ask my HR administrator if I can change my elections first thing tomorrow even though it's already set up in the vendor's system?

Thanks!
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Old 09-16-2014, 10:18 PM   #2
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Contact the administrator and tell them your intent was for them to take out $230 a month for the rest of the year, not $2,760 and ask them to make the necessary changes.

And no, it is not a loophole everyone takes advantage of. As I recall, while the administrator may not require a receipt, you need to keep your receipts in case the IRS every comes calling and audits you to prove that you received reimbursement only for proper expenses that you incurred.
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Old 09-16-2014, 10:39 PM   #3
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was one of those loopholes that everyone took advantage of
No such thing and many corporations will terminate employment for shenanigans such as this. You probably should not tell them you were trying to cheat the system and settle for the $130 for the rest of the year story. Even then you may be over withheld, but that may be the best you can do. Do not submit fraudulent receipts. That will risk action against you.
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Old 09-17-2014, 06:54 AM   #4
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Thanks...I'm just going to call the administrator today and keep it short and sweet and say I misunderstood the program, apologize and ask if I can change my deductions. Sigh.....

Lesson learned, I'm just hoping that the whole "only change your deductions during a major life event" aren't that strict, esp since I was just enrolled yesterday and one pay period hasn't even passed yet.
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Old 09-17-2014, 10:05 AM   #5
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It's NOT changing your election - its fixing a mistake. I think you'll find that they are willing to fix mistakes. If you called a couple months from now claiming a mistake then it would be much harder.
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Old 09-17-2014, 10:31 AM   #6
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Originally Posted by younginvestor2013 View Post
... Please no lectures on the ethics of this .... I'm not one to be a cheater, being relatively new to "corporate america" I just thought this was one of those loopholes that everyone took advantage of but maybe I am wrong? ...

Sorry, can't have it both ways.

Don't tell me you aren't a cheater, then ask about if it's OK to cheat because 'everyone does it'. Ethics are ethics and cheating is cheating. If you had just said 'I want to cheat like everyone else', at least you wouldn't sound hypocritical.


This reminds me of a mandatory 'ethics' seminar at Mega-Corp. It was run by a bunch of corp lawyers, and it was clear to us (mostly engineers in the group) that these lawyers, trying to teach us 'ethics', didn't know the difference between 'ethics' and 'rules'. They got pretty flustered by our barrage of questions, and the holes we poked in every single one of their examples ('so if it's OK for a CEO to do that, but not us, it must be a rule - not a matter of ethics, right? No? So you're saying it's OK for a CEO to be unethical?' We were relentless!). It was kind of funny, but in a sad way.

-ERD50
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Old 09-17-2014, 10:58 AM   #7
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Sorry, can't have it both ways.

Don't tell me you aren't a cheater, then ask about if it's OK to cheat because 'everyone does it'. Ethics are ethics and cheating is cheating.
+1

Time for a gander in the mirror...
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Old 09-17-2014, 11:12 AM   #8
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Old 09-17-2014, 12:15 PM   #9
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I'm sympathetic to a new employee who incorrectly relied on a co-worker's advice, but is trying to make things right. So good for you, OP, I feel sure that HR will help you fix it.

I consider myself pretty strict on ethics but when I was new to the corporate world I got strung along a couple times by co-workers. "Add a little extra to your meal cost when traveling to make up for the inconvenience of being away from home - that's the way things work" and "When you fill out your overtime sheet you round up to the next half-hour". I didn't know where the line was, I was relying on co-workers for guidance.

The most egregious was when my boss would insist we go to dinner after work to talk about some issue, then he would have me pay for it all and put it on my expense report (which of course he approved). I did not know for a long time that this was simply a ruse for him to drink top-shelf liquor rapid fire but not at his expense. Sometimes the bill would be $150 and only $40 of that was food. When I figured out I was a patsy in this scheme I made sure I always had a ready excuse why I couldn't go to dinner after work.
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