Secure The Bag: 6 Smart Ways To Elevate Your Finances Now! - Page 5

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4. Use Your Flexible Spending Account (FSA) for Health Expenses
Doctor making a house call examining a senior woman
Source: andresr / Getty – Doctor making a house call

If you have a Flexible Spending Account (FSA), now is the time to use the funds before they expire at the end of the year (or use the grace period if available). FSAs are offered by your employer and allow you to set aside pre-tax dollars for qualified medical expenses, such as copayments, prescriptions, and over-the-counter medications, the National Institute of Health notes. 

For 2024, the contribution limit for Flexible Spending Accounts (FSAs) increased by $150. Employees participating in an FSA can contribute up to $3,200 through payroll deductions for the 2024 plan year. These contributions are exempt from federal income tax, Social Security tax, and Medicare tax, providing significant savings.

In some cases, employers may also make contributions to an employee’s FSA. If the employee’s spouse has access to a separate FSA through their own employer, the spouse can also contribute up to $3,200. Together, a couple could contribute a total of $6,400 toward their household’s healthcare expenses through their FSAs.

However, it’s essential to act promptly, as unused funds in your FSA may be forfeited due to IRS regulations. For FSAs that allow carryover of unused balances, the maximum amount you can carry over from 2024 to 2025 is $640. Similarly, if you have unused funds from 2023, you can carry over up to $610 into 2024. Be sure to check your plan’s specific rules and use your FSA funds before the deadline to avoid losing any of your contributions.

Using your FSA can help reduce your taxable income while ensuring you have funds set aside for healthcare expenses. If you haven’t already, make sure to submit any eligible expenses and plans ahead for next year by estimating how much you’ll need in your FSA.

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