I would like to share a funny story with you.  My wife and I have two children that still attend day care.  And as such we have day care expenses, and my wife has a flexible spending account through the great school that she works for that provides us a place to deposit part of her paycheck and retrieve the funds tax-free to pay for day care bills after the fact a form over reimbursle.

Even though this saves us money for taxes, it is a big pain in the ass.  It's a lot of extra work, and it ties up our cash flow as the money goes from her check to this account.  We then have to pay for day care out of pocket with money that we don't have in our regular checking account, only to pay back your checking account with this account later on.

It's good for the IRS, but it's a major pain in the neck and cash flow problem for many people even those that have more than ample incomes to pay for day care as the hassle of filling out the forms and spending the time with it is extremely distracting.

Recently we were trying to catch up on our paperwork so we could get a reimbursement after not having one for several months.  That meant that the county that my wife works for basically had an interest free loan from us for several months, while we paid out interest on credit cards.  In some ways this is probably not worth the benefit when we look at the time lost and credit card interest compared to the taxes saved from this proposal.

For example, if we have $5,000 withheld each year, and we have a overall tax rate of say 20%, and if we assume that we can reduce her income by the full amount (which doesn't always happen) then in theory we could save $1000 on taxes.  In reality this never happens.  Now if our credit cards are charging 15 to 25% interest on $5,000 at the end of the day it's about a wash.  We could receive the castrate into our bank account so that we would have plenty of cash flow to pay for day care, and the increased speed of the cash flow to our bank account would also enable us to pay her credit card bills faster reducing our balance and reducing the interest that we pay.

I promised a funny Story

So I promised you a funny story, and I got distracted by taxes.  Look at the preceding like a set up for what's to come now that you know that I view this as a big pain in the neck, a distraction, and probably an extra expense that we don't need disguised as a tax benefit from the government.

So after not filling out one of these forms for several months, we finally requested to receive the day care and then filled out a flexible spending account form, and then took the flex will spending account for men to be signed by the day care to confirm their receipt and amounts were listed correctly on the form, which is rather stupid because we have to mail in the receipt anyway.

My wife then brought the form home to me to mail off, and as I looked at it I realized that the form is filled out with an orange felt tip pen.  And it was signed with a purple felt tip pen.

The result of this is that the form wasn't filled out and either blue or black ink which is typically required by all finance and government institutions.  So I attempted to photocopy it and turn it into something that look like black ink before it melted off because I didn't want the form to be rejected and I wanted a copy for our records in case it got lost or they told us that they couldn't accept it.

Of course the photocopy turned out to be completely blank because my photocopier couldn't read the orange felt tip pen and barely could read the purple signature.  In essence after so many months I wife the first grade teacher who's used to working with orange felt tip pens for paper correction reasons and our day care director who is also used to working with colorful felt tip pens for her children both essentially signed the forms in what could also truly be considered invisible ink!

Now I'm an accountant, and my wife used to be an accountant before she turned into a teacher, and so I found this rather funny that we were attempting to seek a reimbursement on a form filled out with invisible ink.  There's definitely some irony there, we are good friends with the day care director, but it made me laugh in the daydreaming set of my brain speculated on whether or not it would be feasible to write checks with invisible link in the future!  :)