Flexible spending accounts (often abbreviated as FSA) can be a great tool for helping to pay for out-of-pocket health care expenses. What’s really wonderful about these accounts is that you don’t have to pay taxes on the money that you put into them.
Funding Your Account
Flexible spending accounts are offered through your employer, so you should find out if you’re eligible to enroll in one in your current position. When you sign up for one, you can use pretax dollars to fund the account. The money you put in your account can be used for eligible medical expenses, such as:
- Over-the-counter medications
- Prescription medications
- Medical equipment
- Copays for medical services
- Hospital services
Please note: Not all expenses can be charged to a flexible spending account, so make sure you check to see if your expenses qualify.
The money you put into your flexible spending account is taken from your paycheck before any taxes are deducted. This means you don’t end up paying taxes on whatever percentage of your earnings you put into your flexible spending account. For 2018, the maximum amount you can contribute to your flexible spending account is $2650.
Contact Taxation Solutions, Inc. to learn more about the tax benefits of flexible spending accounts! We can even help you set one up.