To even things out, you get a credit. Your tax preparer can help ensure you get proper credit for any overpayment. Deducting Expenses for a Home Office For 1999, the rules for deducting expenses associated with a home office have loosened significantly, allowing many people who were previously denied the deduction to begin claiming it. Many employers offer a cafeteria plan to their employees. The plan may also allow employees to pay for these expenses with pre-tax salary or wages.
Some plans allow employees to choose a combination of the two options.
If the cash option is chosen, the cash is taxable. However, medical expenses paid for with plan money may be deducted on Schedule A, and a credit may be claimed for the child care expenses. Some special considerations regarding the pre-tax option are shown below. Amounts set aside are not subject to FICA or Medicare taxes. Because the amount you set aside is pre-tax, the actual reduction in your paycheck will be less than the amount set aside.