If you have an FSA, you probably already know that you can benefit by using your pre-tax money to pay for qualified medical expenses. But many people who have an FSA also find themselves wondering if the funds can be used on other people, especially if their good friends might be facing some steep medical expenses.
It's natural to want to help your friends out when you're able, so can you use your FSA funds for your friends? We won't leave you waiting -- the answer is no, you can't use your FSA for your friends - even if they live with you. But it's important to discuss why.
Who can FSA funds be used for?
The IRS has very strict guidelines about who and what your money can be used for. When it comes to your personal FSA, you can only use your funds for yourself or for people who are considered qualifying dependents. So when it comes to your friends, they don't become qualifying dependents simply because they live under the same roof as you.
In addition to your friends, this means that you can't use your FSA for siblings, cousins or other relatives that might live with you (unless you can claim them on your taxes as a qualifying dependent).
While you can't use your FSA funds for people that live with you, there are some people you'll be able to use your funds for if they meet certain requirements that allow them to be qualifying dependents. Qualifying dependents include:
Your children under the age of 26
Other relatives that you claim as a dependent on your tax return (such as an elderly parent that you care for)
Don't try to fake the claims
Remember that when you're submitting claims for FSA reimbursement, you have to provide detailed invoices from your care provider to prove that the money you're claiming was a qualified expense. If it isn't your name on the bill, your administrator will notice and your claim won't be approved.
If you use your FSA card to pay for an expense that is determined to be ineligible, it's your responsibility to reimburse the account for the amount. Your funds might be frozen until you reimburse the account.
The IRS is very strict about their definition of dependents that are eligible to be covered under your FSA. If you ever find yourself in doubt about whether or not it's appropriate to use you FSA for anyone who isn't your spouse or a clear dependent, call your administrator. They'll be able to assess your individual situation and provide you with accurate advice.
Sometimes, people look to spend money on their friends just because they they'll have too much money left over at the deadline. If this is your situation, don't worry. There are many ways to use your FSA funds so that you don't lose your money at the end of the year.
From FSA basics to the most specific account details, in our weekly Asked and Answered column, our team gets to the bottom of your most-pressing flex spending questions. It appears every Wednesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.