Fa-la-la-la-laaaaaa! OK, that's a different song, but here at the ol' blog we're still singing about paying fewer taxes. So cue the third verse of The 12 Tax Tips of Christmas: Spend your FSA.
An FSA, or flexible spending account, is a great workplace benefit. With these accounts, you put money in via automatic deposits from your paycheck. Even better, the money is taken out before payroll taxes are figured on your income, providing you a bit of tax break.
There are two types of FSAs, one for child care and the other for medical expenses. The cost of child care means that parents usually have no problem depleting that FSA, in most cases well before the end of the benefit year.
It's a different story for medical FSAs. Too often, employees overestimate their annual medical expenses and end up with a surplus in their medical savings plan as the year winds down.
That's not a good idea. FSAs are use-or-lose accounts. Some employers do give workers a grace period until March 15 to use up the money. But that's up to each company.
So if you still have money in your FSA, check with your benefits office about when you have to use it or face forfeiture of the funds. If you must do so by Dec. 31, get spending!
There is a bit of good news here. There are many ways to make use of your FSA money, as detailed in Flexing your medical account money. Just make sure you do so soon.
Related posts:
- The 12 Tax Tips of Christmas: #1 Sell Assets
- The 12 Tax Tips of Christmas: #2 Improve Your Home
- Time running out to tap FSA accounts
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