Tax Tip of the Day – Start an FSA
If you incur out-of-pocket medical expenses that are not reimbursed by your health plan, you may benefit from a Flexible Spending Account (FSA). Many employers offer a FSA to pay for those expenses on a pretax basis. Also known as a cafeteria plan, a FSA allows a taxpayer to pay for medical expenses such as doctor appointments, prescriptions, dental work and eyeglasses. On a $2,500 allocation to a FSA (generally deducted from your paycheck throughout the year), a married filing jointly taxpayer will save between $250 and $875 depending on his/her tax bracket. Two quick notes: over the counter medications without a doctor’s prescription no longer qualify for FSA reimbursement; and if you do not use the funds by December 31 you lose them!
Stuart Steinberg, CPA, MBA has owned a strategic tax planning practice on the North Shore for 23 years. Please feel free to contact him anytime and let Erock Tax take care of you!