TOOLS

How much should I put in my flexible spending account? -- Explanation of Terms

Annual salary:  Enter your gross annual salary; enter your spouse's gross annual salary separately.

Estimate your taxable income:  Enter your expected total income from wages and other sources and subtract the following:

• Your standard deduction (for 2005, $10,000 for joint returns, $7,300 for head of household and $5,000 for individual and married filing seperate returns) or your total itemized deductions (from Schedule A)
• Exemptions for yourself, your spouse and dependents ($3,200 each in 2005)
• Deductible contributions to IRAs (individual retirement accounts), SIMPLE and Keogh plans
• Job-related moving expenses
• Any penalty paid on early withdrawal of savings
• The deduction for 50% of the self-employment tax paid by self-employed taxpayers
• Alimony payments
• Up to $2,500 of interest on higher education loans

Your federal tax rate:  Locate your taxable income in the appropriate table below and enter the corresponding tax rate for 2005.

Note: If your taxable income is close to a lower bracket, your flexible spending account contributions could lower your tax rate. Complete the calculator, then add up your expenses, subtract them from your taxable income and check these tables again. If your tax rate changes, re-enter your information using the lower rate.
Single
Married filing jointly or qualifying widow(er)
Married filing separately
Head of household

Your state tax rate:  This is the percent tax rate that will be levied by your state in 2005. Consult your tax records for your state tax rate schedule.

Estimated dependent care expenses:  Total dependent care expenses cannot exceed $5,000 or $2,500 for married couples filing separately.