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Level 2

Question

Cafeteria Plans

3 replies
16 views

What is the benefit of a cafeteria plan? Is there something special I should do when filing taxes to gain the benefit from these types of pretax health plan contributions? Should I ever not choose the pretax option? I have had these health plans at jobs before and don't really understand if they help my tax situation or not.

Level 15

Of course you should use the CAFE plans if they are available since you save federal, FICA and most times state taxes on the money set aside.

Snaz1Author

Level 2

Is this an automatic savings or something I need to claim on taxes? When I first had one of these plans I didn't see much difference and started owing a good amount end of year. Since I have a tipped income that changes it may have also been due to fluctuating income just trying to better understand how these plans are beneficial. By saving me money short term do I owe more end of year?

Level 15

AUTOMATIC ... done by the employer thru the payroll system. Nothing you get later or need to set up or "do".